The market has been incredibly resilient during the past month, climbing back up from lows despite continued tariff uncertainty. It has recouped most of its 2025 losses although it's still down 5% this year.
Investors seem confident in the country and the future, and it makes sense that they would also be enthusiastic about the shares of banks, which provide the funds to keep the economy moving. The market celebrated SoFi Technologies' (NASDAQ: SOFI) most recent earnings report, which demonstrated again that this is the bank of the future, but SoFi stock has declined 18% this year. Is now the time to buy?
The bank of the future
SoFi has an all-digital banking app that's attracting new members rapidly. In the 2025 first quarter, there were 800,000 new members, an accelerated rate of growth, and users signed up for a total of 1.2 million new products.
Revenue also accelerated in the first quarter by 33% year over year, its highest rate in five quarters. There wasn't one specific driver; it's the result of the company's broad growth strategy, which involves boosting its brand presence, diversifying its product assortment, and paying attention to what its customers want.
SoFi is still largely a lending company, but the non-lending segments continue to grow faster. They were up 66% year over year in the first quarter, fueled by growth in the financial services segment, where revenue more than doubled.
Image source: Getty Images.
The other segment is its tech platform, which has been mediocre since SoFi acquired it in 2020. Revenue increased 10% over last year, but contribution profit was up only 1%. It may not be the growth driver that management had intended when it first bought it, but it's still adding to the total, and it provides more diversification and another revenue stream.
Adjusted earnings per share were $0.60, up from $0.02 last year and beating Wall Street's expectation of $0.03. Fee-based revenue increased 67% in the quarter to $315 million, accounting for 41% of total adjusted net revenue.
What's happening with lending
Although SoFi's non-lending segments together are growing faster, lending growth is accelerating, and adjusted net revenue increased 27% year over year in the first quarter. Total loan originations were up 66% to $7.2 billion, with strength in personal, student, and home loans, as well as the company's loan platform business.
Lending is still the riskier piece of this business because it's susceptible to changes in interest rates. However, as the company grows and expands its repertory, and as it becomes more experienced over time with risk management, it's lowering the risk associated with this business.
For example, its credit metrics significantly improved in the first quarter. Personal loan 90-day delinquencies declined by nine basis points to 0.46%, and the charge-off rate declined by six basis points to 3.31%.
Priced to buy?
As a fintech, SoFi isn't easy to categorize. It has elements of a bank, which is its core business, but it's also a high-growth tech stock, and its valuation is going to reflect that.
The stock trades at a forward one-year price-to-earnings ratio (P/E) of 27, which is pretty reasonable for a growth stock. But it trades at a price-to-book ratio of 2.1, which is expensive for a bank.
However, I like to point out that it's in the same realm as JPMorgan Chase's price-to-book ratio. It may not have the solidity or name of JPMorgan Chase, which is why that bank gets a premium valuation when there's uncertainty, but it offers growth that's unmatched among U.S. bank stocks, which gets its own premium.
The fintech is becoming much more reliable for growth and profit, and that takes away some of the risk of investing in a young growth stock. But it's still small and growing and isn't for the risk-averse investor. However, if you do have some appetite for risk and a long time horizon, SoFi Technologies stock looks compelling today.
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JPMorgan Chase is an advertising partner of Motley Fool Money. Jennifer Saibil has positions in SoFi Technologies. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.
