$SOFI · The Motley Fool · 2026-11-09

My first one is the smallest in size. This is SoFi Technologies, ticker symbol SOFI. It is a company worth around $20 to $22 billion.

This is a company in the fintech sector. This is a name that is under pressure this year. It's actually down 37 percent, almost 40 percent this year. It was down nearly 50 percent before their quarterly figures were released, but since the quarter was so good, it performed well in all areas, um the stock was under a lot of pressure because of the macroeconomics, not because of the business.

And the business has proven that it can work in any situation. I think that was the real message from the earnings report, and certainly the earnings score they wanted to show the market, "Look, we're a business that can do very well and grow in a high interest rate environment and a low interest rate environment.

Of course, if interest rates go down, we can grow even faster. But, if rates stay high or go up from here , again their assumption is that rates should go up, well, they told us there will be two more rate hikes in '26.

I think it's only going to happen once. And then for '27, they're assuming two more rate hikes. So, those are their assumptions. And remember, they went with the rate cut assumption in '26 .

And since the beginning of the year, their guidance for '26, the assumptions have been bad , yet the guidance has gotten better and better . So, last quarter, they raised their revenue growth guidance for this fiscal year .

Last week, they reported , they raised it again. So, they're expecting 40% revenue growth this year.

Adjusted EBITDA EBITDA is up as well. Net income is up and adjusted earnings per share is up 1 cent to 61 cents.

However, they have given some information that they don't usually give out that far in advance. They have already given us their 2027 guidance. And in 2027, they expect another 27% revenue growth.

Adjusted EBITDA is also expected to grow quite quickly. I think 35 % margin. Net income is also expected to grow at a good rate. And earnings per share will be 90 cents.

So, if we look at the forward multiple on earnings, it's trading at less than 20 times. I would say 20 times next year's earnings. And that's based on their assumption of a few more interest rate hikes and the macroeconomic situation not improving , but who knows what will happen in six months or a year.

Maybe the macroeconomic situation could improve and that could make this business grow even faster .

I remember a year ago they gave us our 2028 target. They said that for 2025 to 2028, revenue will grow at a compound annual rate of over 30%. And based on the numbers so far and the guidance for 2027, they only need to grow 23% in 2028 , which is not a big deal.

Their own EPS target is expected to grow at a compound annual rate of 40% , which means that just 18% growth in 2028 would get them to $1.10 , which seems like a very achievable target right now , especially when you look at the growth rate of this company, whether it's the lending segment or anything else.

We know the lending segment is doing very well , but financial services is also getting much bigger and is expected to grow even more in the next few quarters , so momentum is coming back in that segment.

The technology platform is not the biggest success for the company yet, but it's something that we've known for a long time, although it's getting a little better every quarter, But SoFi has proven to me again that it's a very good company that's doing very well in difficult times , and from a valuation perspective, it looks very cheap to me right now .

Yeah, it's an interesting business. I mean, one thing that's always surprised me is that they have kind of a mixed relationship with the rising interest rate environment, which you alluded to earlier, as a digital financial services company and a national bank.

Of course, when benchmark interest rates go up, they have to pay higher annual percentage returns on their deposit and savings accounts to attract and retain customers. That's not possible.

These higher interest rates increase the cost of borrowing for customers, which can slow down loan applications.

But we've also seen the impact of valuation and fair value accounting pressures on the balance sheets of fintechs and lenders that are sensitive to interest rates ; but they have two tiers of business, one that's somewhat immune to these pressures, and the other that's certainly impacted.

So, we're still seeing them grow nicely , even though customers are currently paying interest rates for a long time. Trying to adapt to the high cost of living.