SoFi Technologies (SOFI 4.48%) began its life in 2011, focused on student loan refinancing. It expanded into other financial products during the next few years, but was primarily still seen as a student loan provider during its 2021 initial public offering (IPO) launch.
Student loans proved to be a challenging business. Federal student loan payments and interest accrual were suspended from March 13, 2020, through Sept. 1, 2023, after the U.S. Department of Education repeatedly extended the COVID‑19 emergency relief measures. In a 2023 lawsuit, SoFi said it had lost $300 million to $400 million in revenue and $150 million to $200 million in profit between March 2020 and March 2023 because of the pause.
Trading has been volatile, and SoFi stock spent most of its life below its first‑day close of $22.65. Thanks to a full year of profitability in 2024, that tailwind set the stage for the stock price to climb 70% in 2025.
Momentum shifted quickly. In January 2026, SOFI dropped 17%.
Image source: Getty images.
Let's take a look at why this happened to see if one major issue could weigh down the stock for the rest of the year.
The SoFi slump
The main issue dragging shares down last month was carried over from 2025.
The triggering event was SoFi's announcement that it was raising capital through a $1.5 billion stock offering priced at $27.50 per share on Dec. 4, 2025.
Issuing new shares adds more slices to the SoFi pie, so each existing slice becomes a little smaller because the company's value is divided among more shares. That dilution can create selling pressure and send a stock price lower.
That's what happened in January.
NASDAQ: SOFI
Key Data Points
Zooming out to see the full picture
It can take a few quarters for shareholders to see evidence in earnings reports that the dilution was worth it.
What we can do now is review outlooks and a certain valuation metric for context on what may be ahead.
For Q1 2026, the company expects net income of $160 million, a 125% increase from Q1 2025. Looking even further out, net income for all of 2026 is projected at $825 million, a 72% increase from 2025.
With a current price/earnings-to-growth (PEG) ratio of 1.51, SoFi is technically overvalued relative to its expected earnings growth. Here's some historical data to add further context:
- PEG ratio Dec. 31, 2025: 2
- PEG ratio Sept. 30, 2025: 2.5
- PEG ratio June 30, 2025: 3.41
- PEG ratio March 31, 2025: 2.01
Although this shows that SoFi shares are still priced for growth, that ratio is currently more modest than it was in past quarters, making it easier for the company to meet and exceed expectations than in the past.
Selling pressure may remain heavy in the near term. If SoFi can show that its fresh capital is being put to good use and still beat expectations during the next few quarters, that pressure may subside for a more rewarding 2026.
