SoFi's (SOFI 4.26%) stock has nearly doubled in value over the past 12 months. The fintech company impressed the market again, gaining more users, growing its revenue at double-digit rates, and expanding its ecosystem with additional digital banking services.
Should you buy SoFi's stock before it posts its fourth-quarter earnings report on Jan. 30? Let's review its business model, growth rates, and valuations to make an informed decision.
Image source: Getty Images.
How does SoFi make money?
SoFi, founded as Social Finance in 2011, initially provided student loans. It subsequently expanded its online platform into a "one-stop shop" with auto loans, mortgages, personal loans, credit cards, insurance policies, estate planning services, stock trading tools, cryptocurrency trading tools, and other banking services.
SoFi acquired the digital payment processing company Galileo in 2020, and it launched its own direct bank after obtaining a U.S. bank charter in 2022. Its digital-only approach attracted millions of younger Millennial and Gen Z customers, and enabled it to expand at a much faster rate than traditional brick-and-mortar banks.
NASDAQ: SOFI
Key Data Points
At the end of the third quarter of 2025, SoFi served 12.6 million members with 18.6 million products in use. That's up from 2.5 million members and 1.9 million products in use at the end of 2021. Galileo, which operates separately, hosts nearly 160 million accounts on its own.
From 2021 to 2024, its adjusted revenue grew at a CAGR of 37% from $1.01 billion to $2.61 billion. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased at a CAGR of 181% from $30 million to $666 million. It grew like a weed even as the temporary freeze on student loan payments (2020-2023) squeezed its margins and higher interest rates curbed the market's appetite for fresh loans.
SoFi, like traditional banks, generates most of its profits from the interest and fees it charges on its loans. It also securitizes and sells some of those loans to institutional investors. A smaller percentage of its revenue comes from its investment and brokerage fees, a cut of the "swipe fees" charged by its card network partners, referral fees for driving its members toward third-party financial products, and subscription fees for its premium SoFi Plus tier -- which offers higher interest rates on savings accounts, discounted loans, and other perks.
What are SoFi's near-term catalysts?
SoFi has been expanding its fee-based services to reduce its dependence on interest income, which is heavily exposed to interest rate swings and other macro headwinds. Its new AI-driven personal finance tools could aid that expansion by cross-selling additional services.
SoFi is also expanding its loan platform business (LPB), which originates loans for third parties. That approach is safer than originating its own first-party loans, and it replaces its volatile interest income with predictable, higher-margin platform fees from its lending partners.
SoFi's new cryptocurrency platform, which offers access to 30 coins and its new SoFiUSD stablecoin, could also grow rapidly if declining interest rates heat up the market. The Federal Reserve has already cut its benchmark rates six times in 2024 and 2025, and it should continue to cut those rates this year if inflation cools off.
Lower interest rates would reduce SoFi's net interest income per loan, but they would also spark more lending activity. SoFi could also refinance its own debt at lower rates to reduce its total interest expenses (which consumed a third of its revenue in the first nine months of 2025).
Should you buy SoFi's stock before Jan. 30?
In its third-quarter earnings report, SoFi raised its full-year adjusted revenue guidance from 30% to 36% growth and boosted its adjusted EBITDA outlook from 44% to 55% growth. It predicted that it would add 3.5 million new members, representing 34% growth from 2024.
Wall Street is even more optimistic. On average, analysts expect its revenue and adjusted EBITDA to increase 37% and 56%, respectively, for 2025. From 2025 to 2027, they expect the company's revenue and adjusted EBITDA to grow at a CAGR of 22% and 39%, respectively.
With an enterprise value of $35.5 billion, SoFi's stock still looks reasonably valued at 22 times this year's adjusted EBITDA. However, it recently diluted its investors with a $1.5 billion stock offering, and that dilution will likely continue as it ramps up its investments.
SoFi's future looks bright, but I'd wait until after it posts its next earnings report to buy the stock. It must surpass its own full-year guidance to beat Wall Street's estimates, and it needs to set the bar pretty high for 2026 to satisfy the bulls. If SoFi doesn't post a big beat and raise, its stock will likely give up some of its massive gains from the past year. That pullback would probably represent a better time to start a fresh position in this high-flying stock.
