After briefly flirting with penny‑stock territory during the 2022 bear market, SoFi shares have since tripled, yet they still change hands for roughly $17, comfortably below the psychologically weighty $20 mark.
With the online bank and student lender now stringing together profitable quarters and lifting its own guidance, investors are asking a fresh question of whether SoFi is a bargain hiding in plain sight, or a momentum story that’s already priced in?
The Profitability Rubicon Has Been Crossed
SoFi’s first‑quarter numbers left little doubt that the “show‑me” phase is ending. GAAP net income came in at $71 million, the sixth straight profitable quarter, on record revenue of $772 million.
Management responded by bumping its 2025 outlook to $3.24‑$3.31 billion in adjusted revenue and $875‑$895 million in adjusted EBITDA, both mid‑single‑digit upgrades from the prior guide. Net income for the year is now expected to land near $325 million, roughly four times 2024’s haul.
Crossing the profitability threshold not only appeases headline‑watchers but also gives SoFi two key strings in the bow.
First, retained earnings are starting to add to tangible book value, which hit $4.58 per share in March, up 18 % year over year.
Second, consistent profits open the door to cheaper wholesale funding and, eventually, the possibility of a dividend or buybacks that many bank investors crave.
Deposits Are Low‑Cost Fuel No One Talks About
It’s hard to build a fintech “super‑app” without a rock‑solid balance sheet. Becoming a nationally chartered bank in early 2022 was a turning point and SoFi’s deposit base has since ballooned to $27.3 billion, 90 % of which comes from direct‑deposit customers.
Not only does that lock members into the ecosystem, it slashes SoFi’s cost of funds, now 189 basis points cheaper than warehouse lines, saving an estimated $515 million a year in interest expense. Net interest margin sits at a juicy 6.0 %, miles ahead of large‑cap consumer banks.
Those savings flow straight to the bottom line and explain why lending remains healthy even with the Fed funds rate above 5 %. Management’s playbook is simply to keep hiking high‑yield‑savings rates just enough to out‑muscle legacy banks, then recycle that capital into prime‑grade personal loans, student‑loan refis, and an emerging home‑equity product.
The Flywheel Is Finally Spinning
CEO Anthony Noto calls it the Financial Services Productivity Loop, a mouthful that boils down to “the more products you use, the stickier you become.”
The evidence is roughly 90 % of new SoFi Plus subscribers were existing members, and 30 % added yet another product within 30 days. In Q1 alone, the firm tacked on 800,000 members and 1.2 million products, bringing the tallies to 10.9 million and 15.9 million, respectively.
Cross‑selling isn’t just a buzzword, it underpins SoFi’s long‑run unit economics. Marketing spend needed to acquire a checking‑account customer today might unlock a brokerage account, a credit card, and a mortgage in 2026.
That lifetime‑value math is why SoFi can aggressively advertise (think TGL’s tech‑infused golf league and naming rights to SoFi Stadium) while still guiding to a 27 % EBITDA margin this year.
Galileo + Technisys
Buried beneath the consumer façade sits a B2B engine that could change the valuation conversation entirely. The
Technology Platform, mainly Galileo’s payments APIs and Technisys’s cloud core, delivered $103 million of Q1 revenue, up 10 % year over year, and now serves 158 million enabled accounts.
Recent wins include Wyndham Hotels’ debit‑rewards launch and an international core‑banking deal with Panama’s Mercantil Banco.
This is a pure‑play processor Marqeta still trades for roughly 5 × sales despite slower growth. Value Galileo at even 4 × its likely 2025 revenue of ballpark $450 million and you’re already covering a quarter of SoFi’s current $19 billion market capitalization before assigning any value to lending or the consumer franchise.
Valuation Math That Actually Matters
At $17, SoFi changes hands for about 62 × management’s 2025 EPS midpoint of $0.275. That headline multiple looks nose‑bleed until you remember that growth is still compounding at 25 %‑plus.
In addition, GAAP earnings are depressed by heavy stock‑based comp that’s falling as a share of revenue and tangible book value is growing so fast that price‑to‑TBV has slid to around 3 ×, in line with fast‑growing regional banks and well below most fintech peers.
Strip out stock comp and you land closer to 25 × 2025 adjusted earnings, a multiple many investors happily pay for Costco‑like growth rates.
If SoFi merely meets its 27 % EBITDA margin target next year and holds a market‑standard 14 × EV/EBITDA, the equity would justify roughly $24‑$26 a share, and that assumes zero multiple expansion for the Tech Platform.
Catalysts the Market May Be Ignoring
With student loan payments fully restarted in late 2024 and rates expected to drift lower into 2026, refinancing volume and associated fees could re‑accelerate just as competitors like Navient have retreated.
SoFi originated $1.6 billion of personal loans on behalf of third parties in Q1, booking $93 million in fees at virtually zero balance‑sheet risk. Scaling that partnership model could add nine‑figure revenue with minimal capital.
After three years as a bank holding company, SoFi now files call reports like any other FDIC‑insured institution. That transparency should help broaden the shareholder base to traditional bank investors who have so far stayed on the sidelines.
But Let’s Be Disciplined About Risk
Loans to prime borrowers still carry credit risk. A deep recession could push SoFi’s personal‑loan charge‑off rate, currently 3.3 %, significantly higher.
While management says they can stomach up to an 8 % loss rate and remain profitable, the stock would almost certainly rerate lower in that scenario.
Regulatory overhang hasn’t disappeared either. The CFPB’s open‑banking rules, should they tighten interchange or data‑sharing arrangements, could dent fee income.
Finally, competition is heating up and Apple Card is humming, and legacy banks are copying SoFi’s high‑yield‑checking carrot.
Is SoFi Stock a Buy Under $20?
At < $20, investors are paying a growth‑adjusted valuation that looks downright reasonable against fintech peers and even against high‑quality regionals.
SoFi is no longer a “story stock” banking on what might happen but a profitable, fast‑growing, fully chartered digital bank with a sticky ecosystem and an underrated payments‑technology arm.
Could you see a deeper pullback in a risk‑off market? Absolutely. But if your holding period is measured in years rather than quarters, buying SoFi below $20 offers asymmetric upside because the core banking operation could earn its way into a modest premium on book value, while Galileo/Technisys provide a free option on a payments rerating.
In short, the stock isn’t uber cheap, but for investors who believe SoFi will keep compounding members, deposits, and fee revenue at a 20 %‑plus clip, today’s sub‑$20 price still looks like an attractive entry point.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.