The SoFi Megarally Is Far From Over: Here's Why

Core Insights - SoFi Technologies has seen a significant turnaround in investor sentiment, moving from skepticism to increased interest due to consistent profitability and growth in membership and transaction volume [1][2][5] Company Performance - SoFi is currently the 56th largest bank in America, with a long-term goal of breaking into the top 10 [2] - The company has become consistently profitable, reporting strong quarterly results that have contributed to its recent stock rally [2][5] - In Q2 2025, SoFi reported a 34% increase in product growth and a 44% increase in net revenue growth, showcasing its operational efficiency [6] - Adjusted EBITDA rose over 70% year-over-year, from $138 million to $239 million, while net income increased from $8 million to over $97 million [7] Stock Valuation - SoFi's stock has surged over 238% in the past year, now trading at a forward P/E ratio of about 47, significantly higher than competitors like Block and PayPal [8] - This premium valuation may pose risks for a price correction if growth falters, but indicators suggest continued high growth due to successful cross-selling strategies [9] Revenue Growth Drivers - A 52% year-over-year increase in financial services revenue has significantly contributed to total net revenue growth [10] - Potential federal government actions to privatize the student lending market could enhance demand for SoFi's services, creating new customer acquisition and cross-selling opportunities [11] Long-term Outlook - SoFi aims to capture affluent millennial and Gen Z customers, which could help it achieve its goal of becoming a top-10 bank [12] - With a current market cap of $34 billion, there is considerable room for growth compared to larger banks valued in the hundreds of billions [13]