SoFi, down ~42% YTD, has gone from overvalued to undervalued: at ~33x P/E (~21-22x projected) it is not too expensive given 30% annual profit growth over two years, though Galileo has slipped two quarters and may be bottoming. The speaker owns it, citing high operating leverage and international expansion.

Some of them are not performing well today, such as SoFi, for example, whose stock has fallen by 40% since the beginning of the year.

I think SoFi is a really interesting company, because it is considered a hot stock in many financial technology companies, but its valuation is historically very good.

It grows in all appropriate areas. It is true that its technical solutions have faced some difficulties, but we want to see growth in lending, and growth in financial services.

This is the area in which the company is experiencing significant growth today.

Yes, SoFi is currently valued at around $20.5 billion, with a current price-to-earnings ratio of 33x and a projected ratio of approximately 21x or 22x. Some might say that this figure is high for a bank.

And I agree that it is high for a typical bank achieving single-digit growth. But for a company whose profit is expected to grow by 30% annually over the next two years, with revenue and earnings per share growing at a faster pace, I don't think its price is too high.

As mentioned, the Galileo technology platform has experienced a decline in its business over the past two quarters. We may be seeing it reach its lowest point, or we may have already seen that in the last quarter.

But the lending sector and other financial services are performing excellently.

However, the stock is under pressure, having fallen 42% since the beginning of the year. In fact, this brings the stock back to a more sensible valuation. The price-to-book ratio is usually considered when valuing most bank stocks, and it is currently around 1.9.

You can now buy bank shares at a price that is roughly equivalent to their book value.

So, depending on the type of bank stock, this price may be a little high or a little low , but it's not four times the book value as we were expecting in late 2025.

I think what actually happened is that the market moved from overvaluing the stock to undervaluing it a little. It is worth noting that Anthony Noto , the CEO, was adept at exploiting these opportunities where the stock was overvalued .

He would sell shares, put them on the public market, and then use the money to expand the company.

So, if we look at their expansion in lending over the past year or so, we will find that it is driven by the fact that they now have more capital available to do this lending. They had this capital because they sold shares at a higher valuation.

As you know, there is a kind of balance, and that's what's happening with SoFi stock. It goes from being undervalued to being overvalued. Noto usually buys the shares himself when the stock is undervalued .

And when it is overvalued , it sells shares, you know, to the public through the company so that it can continue to grow.

It's more like a constant struggle, but I think the company , at its core, continues to perform well, and ultimately, that's what will affect the share price. Why do you think the stock has fallen by 42%, other than that it may have been overvalued at the beginning of the year?

Is it only related to macroeconomics? Is it because they entered 2026 expecting interest rates to be lowered? Now we have an interest rate hike, although the outlook today is better than it was at the beginning of the year.

Is this a purely macroeconomic problem, and once the macroeconomic picture improves , the stock will improve, or does the market simply want more growth?

It might be a combination of both. I think the technical platform aspect is part of the problem, isn't it? Looking at their financial data, we find three sectors: the lending sector, the technology platform sector, and the financial services sector .

One of these sectors is suffering from poor performance, and it is not the platform that we, who bought their shares two, three, or four years ago, expected.

So, if we exclude this sector, we say: "Well, we no longer have three growth paths, but only two." This may warrant a slight revaluation of the stock.

But the other thing, you're right, interest rates put more pressure on this company than others, because management was adamant that it expected interest rate cuts this year. You can refer to their projections at the beginning of the year; they are generally very conservative in the way they run the company.

But they were going into the year saying, "We're going to see, you know, two, three or four interest rate cuts. That's going to be great for our business."

Now, we are seeing an increase in interest rates. I don't think it's the end of the world, because interest rates are something banks deal with constantly. Banks are usually adept at matching loan maturity dates with loan size and financing costs.

So, it won't negatively affect their profits , but from a market perspective, it's as if they're saying, "You were expecting a cut, but there's an increase. So, maybe we should reassess the stock price a bit."

I truly believe this is the most important thing that happens.

Yes, I agree. Once again, what surprised me was the deterioration of their expectations. Initially, expectations didn't change at all . So, in my opinion, that was acceptable. But then the outlook worsened, and the revenue forecasts were revised upwards.

Therefore, it is clear that in such circumstances, they can still perform very well.

It remains to be seen what will happen in the last quarter of the year, which I believe we will announce at the end of October. We'll see what happens there.

Well, another thing I think investors should consider regarding these two companies, and the reason I own shares in both of them, is that their business style is different from most of their traditional competitors, isn't that right ?

When I bought shares, I think it was in 2023 initially, one of the reasons was that I saw bank branches spreading in my area. I live in the American Midwest. It seemed strange to me that these financial technology solutions were constantly improving.

If you are a traditional bank and want to grow your business, you need to build an actual building and hire employees to work in it. SoFi and Robinhood, however, take a completely opposite path.

As a result, they have a high operational leverage. This is why you may see a high price-to-earnings ratio .

But if we look at SoFi and Robinhood, as we have seen over the past five years, their operating profit margins— I think this is the key factor to focus on— continue to rise, because they are able to take advantage of all their investments in technology.

Each new customer is not very expensive, and as you mentioned, their growth is not limited to the United States ; they can expand internationally as well.

So, there are many opportunities in the future. This is somewhat similar , you know , to Netflix entering the television market. You may have a local monopoly on local news, but this will be limited to your region only.

The same applies to banking services. Now, Netflix enters the market and says: "We will not be limited to the United States , but will be everywhere in the world." It's almost the same concept. So, I think that's the real advantage here.

This is why these companies still have enormous potential, because they can become much larger than most of their competitors without having to build a huge physical infrastructure.

I agree. I think that's why I own both of them.