Asymmetric Investing by Travis Hoium on $SOFI (Oct 27, 2026)

SoFi released its earnings report before the market opened on Tuesday, and there was a lot to like about the report. As I was recording, the stock price rose more than 10% just before the market opened.

But I want to discuss in detail what exactly we learned from these results. This is a stock that would hold about a 5% position in an asymmetric portfolio. So this is a pretty big position for Sophie.

But the year was a bit bad. You can see this from the chart on the right. It has decreased by about 50% in the last year. Otherwise, it would have been a much larger position.

But I like the path that Sofa is taking now. Their revenue growth continues to increase. The number of users is growing and so is the number of products they are using. So there's a lot to like and they gave 2027 guidance, which was really unique according to the company's management during the conference call.

The reason for this is that they are now getting much more transparency in business than before.

Is SoFi moving in the right direction in the long term? I'm not so concerned about whether analysts achieved the quarterly forecasts they made, but rather what matters is the direction of the business in the long term.

And I think everything is pointing in the right direction.

As I said, the 2026 guidance has been raised, revenue has grown 44% year-over-year, which is really extraordinary. Adjusted EBITDA is now at a 34% margin. This is truly a remarkable margin.

What I find interesting about SoFi —and this is why I hold more SoFi shares than traditional bank shares—is that it is a digital-only bank. Therefore, they do not have any infrastructure costs or operating expenses like the big banks.

This gives them the opportunity to think on a larger scale.

If you think about their advertising campaigns, even sponsoring something like SoFi Stadium in Los Angeles— it's an attempt to attract a national audience, which most banks can't really do, at least not at the scale and cost that SoFi is doing.

So, when you look at their 'unaided brand awareness', that's exactly what they're trying to achieve. They want to increase brand awareness so that when you are looking for a banking product, credit card, personal loan, or home loan, their brand is the one that comes to mind.

In the case of SoFi, a large funnel of customers will be created. This will help them grow their membership, which currently stands at 17 million and has grown at a 30% compound annual growth rate (CAGR) since 2022.

We also see a lot of operating leverage in the business, and that's a real change from when I started covering this company a few years ago. We have gone from losses to incredible profits.

There has been a compound annual growth rate of 52% in the last few years. Although it came from a very small base. So, you need to consider this a little carefully.

But usually when companies go from negative margins to positive margins, it acts as a big catalyst for stocks.

And you can see this is the beginning of the 2027 guidance, they're expecting $6.4 billion for next year. I think it's a 29% growth. I wouldn't be surprised if they could do better than that.

And as I said, I'm now looking at 90 cents in earnings per share. Therefore, the shares are trading at a price slightly less than 20 times forward EPS. This is a reasonable price considering the extraordinary growth rate, which is not usually available to most banks.

So, these are the real driving forces of the business. The number of members and the number of products those members are using. So a product could be a loan, it could be a credit card.

As a bank, what you want is for members to use more and more products.

You can see that a year ago they were using only 1.47 products per member. Now it has increased to 1.56. This is still relatively low, but SoFi doesn't use the same tactics that many banks have used in the past, such as offering free benefits if you open a checking account and deposit money from a savings account.

But what you would like to see is people using the Sofi platform more. So hopefully over time it will grow to three, four or five products, because you want people to use checking accounts, credit cards, investment accounts—all through SoFi.

They have also increased their fee-based income quite significantly in the last few years. This is a picture of annual revenue, annual adjusted net income, and fee-based income.

They are looking at an annual rate of about $2.3 billion in fee-based revenue. You can see that change over time, which was 25% in 2022. Now it stands at 42%. It is moving in the right direction. Slightly decreased compared to 2025.

But again, what we want to see is a move towards a fee-based business that reduces the risk of traditional lending. Okay, let's start with the lending or credit department, because this is where traditional banking risks are higher.

And you can see that they have had significant growth in the lending business, which is 68% year-over-year.

That's why they raised capital, which is one of the reasons. I think it was earlier this year when the share price was high. It may have been late last year, but it has been used to grow the lending business by raising capital at a higher price-to-book multiple.

This is supposed to be a relatively high margin. You can see they have a strong contribution margin here, but that naturally increases the amount of debt for the business.

Now, what I like to see is personal loans, student loans, and home loans—you're seeing growth in all three categories. But what I like to see here is that home loans are really growing very significantly.

In 2024, there were only $490 million worth of home loans outstanding. Now $1.4 billion in the third quarter alone.

Interestingly, personal loans have actually grown even faster than that. So this is something that needs to be kept in mind. Now, one of the things they talked about is that their charge-off rates have actually improved quite significantly.

So, this is the personal loan on the gray line. You can see it again. This is what you want to see as an investor. Personal loans excluding charge-offs, which include the sale of some defaulted loans, are in this middle line.

And student loans are at the bottom. It has a relatively low probability of default.

Financial services. This was a major driver of growth a few years ago. The recent growth rate is not what it used to be. Non-interest income. This increased to 244 million from 216 million a year ago.

Net interest income, mainly generated from deposits and credit cards, reached $281 million, with a growth rate of 40 percent. Contribution profit is about 50 percent.

And now the so-called black sheep or weak side of the business. They beat Chime at the end of 2025. So it is now increasing on a quarterly basis. It's growing slightly, not by much, but it's been decreasing year after year due to the loss of that one customer.

If I were an investor in the SoFi technology platform, I wouldn't pay much attention to this business. They have to create it for the business as a whole, but it's not necessarily going to increase revenue or growth in the long run.

Okay, finally, this is the most important thing. Let's take a look at the guidance numbers, not just for 2026 as given above, but also for 2027. What you see on the right is their previous, i.e. last quarter's guidance.

As you can see, they were expecting revenue of about $4.8 billion. Now they are expecting $5 billion in revenue with more than 40 percent growth or about 40 percent growth.

Adjusted EBITDA has also increased significantly. It is now expected to grow by about 57 percent and earnings per share to be 61 cents, a penny higher than previous guidance. But again, this is moving in the right direction. That's exactly what you want to see.

And again, the forecast for 2027, management usually gives this forecast a little lower. You can see that consolidated net revenue is expected to grow by 27% and consolidated earnings per share are expected to increase by 48% to 90 cents.

So when I'm recording, the share price is around $16, which means the shares are trading at about 18 times 2027 earnings. In my opinion, this is a pretty reasonable multiple for a company that is currently growing at over 30%.

Next year's forecast is also likely to see revenue grow by 30% or more, although the forecast is slightly lower than that. However, management usually sets targets low and then does a pretty good job of exceeding them.

But I'm really impressed with what I'm seeing from SoFi. As I said, this is one of the stocks I have in my asymmetric portfolio because they are consistently increasing their revenue growth.

We're seeing the operating leverage that you would want to see. Everything is moving in the right direction.

I definitely want to keep an eye on business risks. There is a risk of default in personal loans, but the increase in their home loan numbers is positive. They can increase the number of members and the number of products per member.

This is what will create value for investors in the long term.