SOFI Stock: Fintech SoFi Flounders Despite Strong Q1

Introduction

SoFi Technologies [SOFI] is a San Francisco-based personal finance and fintech service provider.

With the stated aim of helping people achieve financial independence, the platform has 10.9 million members and a total of 15.9 million products.

Q1 2025 results, announced April 29, saw impressive growth, with many record figures reported. The earnings joy did not translate into stock success, however, due to lackluster GAAP EPS and issues with the technology platform. 

Hot Earnings Gone Cold

Q1 saw analyst EPS expectations of $0.03 exceeded with $0.06. Quarterly revenues increased 20% year-over-year to reach a record $771.76m, and membership increased by 800,000 new users, bringing the total to 10.9 million.

With such a success of a quarter, it would be natural to assume SOFI stock logged a notable uptick after earnings, but this was not the case. Following a jump in initial trading, the stock closed the week down 4.30%.

More generally, the year to date has seen SOFI stock dip 17.34%, although it maintains an impressive 82.90% gain for the 12 months to May 6.

What Went Wrong?

In part, the answer could lie in the use of EBITDA and GAAP EPS, despite adjusted profits being the norm for valuing small-cap tech companies. Investors may have looked more favorably on true adjusted profits.

The other skeleton lurking in the earnings report was a wobbly performance from SoFi’s Technology Platform. Initially an exciting prospect to investors, the platform lost 10 million accounts in Q1 and is currently flat relative to numbers reported in Q2 2024.

It is worth noting that SoFi’s offering has expanded beyond the Technology Platform, and it is far from the only exciting product offering in the firm’s armory these days.

Personal Finance Options

Over the past decade, the personal finance sector has developed in unprecedented ways, and the introduction of artificial intelligence (AI) and relaxed cryptocurrency regulations have accelerated this change in the last five years.

Two of SoFi’s significant competitors, LendingClub [LC] and Upstart Holdings [UPST], have dived headfirst into AI applications in the industry and are seemingly reaping the rewards. Here are how the three companies’ fundamentals compare:

Source: Yahoo Finance

Upstart, which reported on May 6, hit an earnings and revenue beat for Q1 2025 but saw shares slump on soft Q2 and full-year revenue guidance. Adjusted EPS came in at $0.33, versus a consensus of $0.17, and revenue of $213.4m marked year-over-year growth but a sequential drop, although it was above analyst estimates of $201.3m.

While SoFi is already using AI to automate fraud detection systems, it could be Upstart’s use of AI in model innovation and Lending Club’s use of AI tools for users that give the competitor firms their edge in the current market.

That said, Lending Club’s Q1 2025 earnings were disappointing, with diluted EPS dipping by 9.09% year-over-year. However, as the firm leans into acquisitions like AI-powered spending intelligence platform Cushion, success in these areas could see the stock recover. It is down 38.23% for the year to May 6.

SOFI Stock: The Investment Case

SoFi’s strong earnings results, positive prospects for future growth and low trading value could provide an attractive entry point for those looking to gain indirect exposure to cryptocurrencies.

The Bull Case for SoFi

Seeking Alpha reported that analysts expect nearly 40% growth for SoFi in 2026. As the firm continues to expand — and in light of the April 29 announcement that it will bring back crypto investing services — the current value could present an appealing entry point for investors.

Those who pay attention to big-name investors may also be interested to know Cathie Wood, Jim Simons and Ken Griffin hold $119.3m, $84.4m and $70.1m of SOFI, respectively, even if each of them has sold a significant chunk of their stakes in the most recent quarter.

After SoFi shed its cryptocurrency investment services in 2023 to become a digital bank, digital asset management seems to be back on the table for the firm. On the earnings call, CEO Anthony Noto attributed this move — which includes the listing of various crypto-centric job vacancies — to the “evolving regulatory landscape”.

The firm’s comprehensive reentry into the crypto space at a time when cryptocurrency exposure is generally looked upon favorably could present an enticing opportunity to investors keen to gain indirect exposure to the theme.

The Bear Case for SoFi

That said, there are certainly clouds on the horizon for SOFI, as shown by the lackluster response to exceptional earnings.

As with all personal finance firms, particularly those that offer individuals loans, the specter of recession could weigh heavily on SoFi over the coming months.

With geopolitical uncertainty and US President Donald Trump’s erratic economic decision-making, it does not really matter whether the firm sees an uptick in loan defaults. What matters is investor sentiment, and caution here could see the stock flounder.

While SoFi will continue to grow and amortization charges naturally diminish in importance, wider market caution seems to be a significant sticking point for near-term growth.

Conclusion

Should SoFi continue to grow and improve in spite of underwhelming investor sentiment, it could become a long-term play with significant promise.