SoFi Technologies (SOFI 4.48%) just closed the books on a fantastic year. Shares of the digital banking powerhouse were up 70% in 2025. And over the past 36 months, they have skyrocketed a jaw-dropping 510%. It helps when the business is putting up strong financial results that the market has started to fully appreciate.
Perhaps there's still an opportunity here. Should you buy this fintech stock while it's trading below $30?
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SoFi can no longer be ignored in the financial services industry
From a customer's perspective, the products and services offered by companies within the financial services industry can all look the same. In this way, the market's offerings certainly appear to be highly commoditized, with little differentiation among providers. However, there are still thousands of banks in the U.S., so people have developed a way, whether implicitly or explicitly, to have a preference.
SoFi's monster success is all the more impressive when you consider this crowded backdrop. The business has carved out a niche in the industry because of its digital-only model that prioritizes giving its members an exceptional user experience. The company has leaned heavily on technology, data, and the internet to do this.
It has also made a name for itself by focusing on a younger and more affluent target customer demographic. For example, the average SoFi student loan borrower has a "weighted average income of $157,000 with a weighted average FICO score of 773," according to CFO Chris Lapointe.
The company's fundamental strength is notable
It's difficult not to get excited about SoFi's growth over the years. After adding 905,000 net new customers in the third quarter (ended Sept. 30), the business now has over 12.6 million. That figure expanded nearly four times since the end of 2021, showcasing impressive adoption. That has propelled revenue, which increased 38% year over year in Q3 to $961.6 million. It's worth pointing out the gains are broad based, with interest income and non-interest income posting growth.
There might be a long runway ahead for SoFi. CEO Anthony Noto wants his business to one day be a top-10 financial institution in the U.S. It's showing no signs of letting up. SoFi has a culture of innovation, releasing new products and services that its customers find valuable, like the recently launched blockchain remittance transfers and cryptocurrency trading.
NASDAQ: SOFI
Key Data Points
Valuation might be a concern
Since SoFi shares have soared more than 500% in the past three years, it's important to take a closer look at the valuation. The last thing that investors want to do is overpay for a business, even one that's finding remarkable success in the way that SoFi is. The stock trades at a forward price-to-earnings (P/E) ratio of 46.1. At first glance, this doesn't look like a bargain opportunity that presents a margin of safety. After all, the S&P 500 index trades at a forward P/E multiple of 22.1.
For those investors who are especially particular about the valuation they pay, SoFi might not be a good company to buy below $30. However, I adopt a more optimistic view. It's hard to argue with the earnings trajectory of the business as profits have been soaring. And in the company's Q4 2023 financial update, management laid out a long-term outlook, forecasting earnings per share (EPS) to rise at a compound annual rate of 20% to 25% in the years after 2026. This is after Wall Street consensus analyst estimates call for EPS to increase 57% in 2026 compared to last year.
There's a very good chance, in my view, that SoFi continues to exceed expectations, with revenue and profits growing rapidly in the years ahead. This makes the current valuation less of a concern. Therefore, I think the stock remains a buy right now.
