Investors have been bailing on SoFi Technologies Inc (NASDAQ: SOFI) this year amidst concerns the Trump tariffs could prove to be a meaningful headwind for the fintech industry.
The new tariffs are broadly expected to result in stickier inflation, making it that much harder for the Federal Reserve to consider lowering interest rates any further in 2025.
That could be a significant challenge for SoFi stock as higher borrowing costs tend to weigh on demand for loans – a core source of revenue for the California based neobank.
Additionally, a potential recession due to Trump tariffs could result in increased default, which may further hurt the company’s profitability.
Still, there are reasons to hope for a swift recovery in SOFI in the coming weeks and months.
SoFi stock is now trading at an attractive valuation
SoFi shares were turning a bit unattractive to own in the final week of January due to valuation concerns.
They were going for a forward price-to-earnings multiple of about 60x at the time.
However, the fintech stock has lost nearly 40% over the past six weeks that has effectively removed the valuation overhang.
While the forward P/E multiple on SOFI at about 27 currently is still pompous compared to the conventional banks, it shouldn’t really come as a surprise considering the Nasdaq listed firm is growing significantly faster than a typical bank.
SoFi’s tech-focused platform actually makes it a better alternative for a traditional bank.
SoFi continues to boast strong financials
On top of an attractive valuation, shares of the company based out of San Francisco, CA continues to offer impressive financials as well.
SoFi’s rate of growth is hardly losing any steam as it gets bigger over time.
The fintech added more than 4 million new products and 2.8 million new members in 2024.
Its revenue went up an exciting 26% on a year-over-year basis last year to $2.7 billion, helping the bottom line pull out of the red as well to $301 million.
Additionally, SoFi has been committed to diversifying its revenue streams.
The firm’s non-lending revenue actually made up close to half of its overall top-line in 2024.
Is it worth investing in SOFI today?
SoFi’s venture into new services could help unlock significant further upside in its share price despite concerns of Trump tariffs and the related economic uncertainty.
New offerings will continue to drive more members to the neobank, helping it eventually become an ecosystem that will serve as a one-stop shop for a whole bunch of financial services.
All in all, diversification will help SOFI trim its over reliance on a single product.
That’s why analysts continue to see upside in this fintech stock to $14.43 on average.
That said, SoFi is not a dividend stock at the time of writing.
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