Shares of SoFi Technologies (SOFI 2.76%) stock fell 13% in January, according to data provided by S&P Global Market Intelligence. There were a few moving pieces, including news about the Federal Reserve that affected financial stocks in general, and concerns leading up to the company's earnings report on Jan. 30 about whether or not it could sustain its high valuation. The stock fell after the report as well.
Image source: Getty Images.
The bank of the future
SoFi is an all-digital bank that's on its way to becoming a top-10 U.S. financial institution, at least according to CEO Anthony Noto. It's capturing market share, including adding a record 1 million new accounts in the 2025 fourth quarter, and increasing revenue at a fast pace on its march toward the top.
There's an incredible opportunity across SoFi's business. Its lending segment, which is its core segment, is thriving as interest rates have gone down, and it sees many ways to boost this business. For example, it offers customers personal loans with low interest to pay back high-interest credit card balances at other banks.
The major innovation is in the financial services segment. SoFi has been launching all sorts of new products focused on blockchain, and it's planning many more. One upcoming service management mentioned on the fourth-quarter earnings call is global payments on the SoFi app, which will open up its business to international customers. International payments to certain countries are already live for current SoFi account holders.
SoFi's third segment is tech platform, a financial infrastructure business. Although it has delivered mediocre results for the company, management was full of praise for it on the fourth-quarter earnings call, since it uses it to create its own financial infrastructure. Its new SoFi Smart Card was developed on the platform in just a few months, and it's fielding demand from many companies for the value and customization it offers.
NASDAQ: SOFI
Key Data Points
A matching premium price
SoFi reported blowout earnings last week, with a 37% year-over-year increase in adjusted net revenue and a 160% increase in earnings per share. However, the stock fell after the report. The Federal Reserve paused rate cuts last week, which weighed on many financial stocks, and the market may have also been reacting to the appointment of Kevin Warsh as the next Federal Reserve chairman.
Leading up to the report, the market may have been concerned about whether SoFi could sustain its high valuation. It's not cheap, trading at 58 times trailing 12-month earnings, but it trades at a price-to-book ratio of 2.6, just above JPMorgan Chase's 2.4. Its strong performance and huge opportunities justify some premium, and over many years, the stock could be a multibagger.
