We just covered Avoid SpaceX and Buy These 11 Stocks Instead. SoFi (NASDAQ:SOFI) ranks #9 (see Avoid SpaceX and Buy These 5 Stocks Instead).
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SoFi (NASDAQ:SOFI) is a fintech bank that offers personal loans, student loan refinancing, and financial services. It sells checking accounts, investment accounts, credit cards, crypto, and subscription services to its members. Its customers are mostly people refinancing expensive credit card debt into cheaper personal loans. The moat is the network effect of having 14.7 million members locked in, and the ability to upsell them more products over time.
The stock is down 34 percent this year because of how SoFi accounts for loans. When SoFi (NASDAQ:SOFI) originates a loan, it doesn’t wait to collect interest payments over time. Instead, it records all the future interest it will earn from that loan on day one. So if you borrow $100,000 and will pay $30,000 in interest over five years, SoFi counts that $30,000 as profit immediately. It’s not cash. It’s an estimate of cash that will come later. The market worries that if borrowers default, those estimates were wrong and the earnings evaporate. That’s why the stock got crushed.
But here’s the bull case. The core business is getting stronger, not weaker. Deposits have grown 2.2x in just over two years. That’s cheap funding. The company is no longer dependent on expensive market debt, which has fallen 64 percent. Customers are buying more products per account. The upselling rate is accelerating. Revenue is growing 41 percent year over year. The company is profitable with ten consecutive quarters of GAAP profits. Operating leverage is kicking in as expenses grow slower than revenue.
The biggest growth catalyst is the massive installed base of members who haven’t been monetized yet. SoFi (NASDAQ:SOFI) has 14.7 million members but many only use the free checking account. Those members represent a pipeline of growth the company can upsell without spending more on marketing. The acquisition cost is already paid. Upselling them to lending products, investment accounts, or the $10-per-month subscription is nearly free to execute.
A second catalyst is the Loan Platform Business, where SoFi originates loans for third parties and collects fees without holding the risk. That business grew from $268 million annualized run-rate to $775 million in less than a year. It’s capital-light and doesn’t require deposits to fund.
Polen 5Perspectives Small-Mid Growth Strategy stated the following regarding SoFi Technologies, Inc. (NASDAQ:SOFI) in its Q1 2026 investor letter:
“The most significant detractors from the Portfolio’s relative performance in the quarter were SoFi Technologies, Inc. (NASDAQ:SOFI), Figure Technology Solutions , and Affirm Holdings . SoFi Technologies started its life in 2011 as a student loan refinancer and has rapidly evolved into a full-service digital banking platform. Its integrated ecosystem is designed to provide a one-stop solution for consumers, while leveraging technology to drive efficiency and cross-sell opportunities. Shares underperformed as investor sentiment toward consumer lending and fintech remained pressured amid interest rate volatility and macro uncertainty. Concerns around loan growth, funding costs, and credit performance weighed on the group more broadly. While SoFi continues to demonstrate solid member and product growth, the market has taken a more cautious view on near-term earnings trajectory (Click Here to Read the Letter in Detail).”
While we acknowledge the risk and potential of SPOFI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SOFI and that has 10,000% upside potential, check out our report about the cheapest AI stock.
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