The digital bank and personal lender SoFi (SOFI 0.26%) delivered strong 134% net income growth and 43% net revenue growth. Results were roughly in line with what Wall Street analysts had expected.
However, management left its full-year guidance unchanged, while its second-quarter revenue guidance came in slightly short of consensus estimates.
The stock had sunk roughly 13%, as of 11:18 a.m. ET today.
SoFi continued to demonstrate strong growth, adding over 1 million new members in the quarter, while EBITDA margins also expanded to 31%.
But despite the growth, here's the real reason I think the stock is getting crushed today.
Image source: Getty Images.
Loan platform business falters
A big part of SoFi's growth since 2024 has been its loan platform business (LPB). SoFi is a big originator of personal loans. It often holds loans on its balance sheet for months and collects recurring interest income before selling them to investors through various distribution channels.
Lately, LPB has become a major new distribution channel for the company. In this business, SoFi originates loans on behalf of third parties with predefined credit and return criteria and collects a fee for facilitating the transaction.
SoFi can also make referral fees through this program. The idea was to set up a revenue stream for all of the potential borrowers the company turned away, while also finding a capital-light stream of fee income.
The business has boomed with SoFi hitting an annual LPB origination run rate of $15 billion at the end of last year, and generating nearly $576 million in LPB fees, which equated to roughly 16% of revenue in 2025.
NASDAQ: SOFI
Key Data Points
In the first quarter, LPB originations of roughly $3 billion came up well short of the consensus estimate of nearly $3.7 billion, according to data from Visible Alpha, although total personal loan originations still came in above estimates.
Meanwhile, LPB fees of nearly $141 million came up well short of the $189 million estimate from Truist analyst Matthew Coad.
SoFi CFO Chris Lapointe said the company, in the quarter, made the "deliberate decision" to put more originations on the balance sheet, which led to lower LPB fees. Lapointe noted significant demand from LPB partners "over and above what we decided to fulfill this quarter."
Adding more loans than expected to the balance sheet led to much higher net interest income and a net interest margin than analysts had expected, according to Visible Alpha, but it may also add to existing credit concerns.
Additionally, the take rate in the LPB business, including referral fees, which is essentially the cut SoFi takes for facilitating these LPB transactions and referrals, fell from 5.16% in the previous quarter to 4.61% in the first quarter of 2026.
Approach LPB with caution
I've long had concerns about the sustainability of SoFi's LPB business, and it's not just about private credit. Demand for consumer credit still seems pretty robust.
However, I suspect that much of the credit originated in the LPB business is being issued to borrowers with lower credit quality and therefore has higher loss content.
CEO Anthony Noto said on the company's earnings call this morning that LPB volume is incremental, not volume that would otherwise go on the balance sheet. Decisions are made based on SoFi's capital position, balance sheet, and "credit profile of borrowers," he said.
While SoFi has recently secured new commitments from LPB partners, highlighting demand, I think this capital could dry up quickly if the consumer begins to struggle, if there is a recession, or if interest rates increase, pushing up the cost of capital.
The market appears to like this revenue source because it's capital-light and carries no on-balance-sheet credit risk for SoFi. But as I mentioned, I don't believe it will be sustainable through an entire credit or interest rate cycle.
That's why I continue to approach the LPB business with skepticism, and do not recommend owning the stock.
