SoFi and Visa Earnings Point to Consumer Confidence

In this episode of Motley Fool Hidden Gems Investing, Motley Fool contributors Travis Hoium, Lou Whiteman, and Rachel Warren discuss:

• SoFi’s results.
• Is SoFi just a bank?
• Visa’s strong growth.
• P&G Iis fine?
• Bloom Energy growth.
• The AI trade.

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A full transcript is below.

This podcast was recorded on July 29, 2026.

Travis Hoium: Earning season is in full swing, and Motley Fool Hidden Gems Investing starts now. Welcome to Motley Fool Hidden Gems Investing. I'm Travis Hoium, joined today by Lou Whiteman and Rachel Warren, and guys, we've got earnings on the mind today. We're going to get four different earnings reports, at least touch on them.

Lou, the first one that I wanted to get your thoughts on is one that I'm sure a lot of Fools have in their portfolio, or at least their watch list. That is SoFi, the numbers looked pretty impressive. Total revenue was up 43%. Net income was up 61%, and yet, the stock is down almost 10% today. I think the stock is acting rationally. Again, I know I get a lot of hate for this, but you just don't like growth, Lou. Let's be honest.

Lou Whiteman: I like growth. It's just the question of what you're paying for growth. One thing we learned from that short report, and I think it's important. The short report was mostly just nonsense, but one thing that I think it did highlight is SoFi loves to use mark-to-market and other adjustments to create non-GAAP earnings. That's fine. They disclose it. Again, the short report was overstated. But it makes apples-to-apples comparisons to other banks very deceptive, and I think it flatters SoFi in a lot of ways. On a GAAP basis, SoFi is trading at 40 times earnings. The average bank trades at 10-15 times earnings. I can find you really good ones right now where the dividend yield is at 4% or so, and they're on the lower end of that 10%-15%. The question is, yes, SoFi is growing faster than these banks, and I think they can justify a premium valuation based on that growth. But I don't think the market is wrong in saying, I ain't 40 times earnings, which, you know, and we can go deeper into it if you want. But I think for all SoFi tries to say it is, SoFi is a bank, and it should be judged as a bank. It's a fast-growing bank. Give it a premium, but I do think the valuation is still, I catch.

Travis Hoium: Is that the criticism of the quarter and the stock right now still? Maybe this is a more attractive bank than other banks because it is growing more quickly. I still don't want to pay this price. And at what price do you think it becomes more intriguing?

Lou Whiteman: My criticism is, why now, guys? We've known this for a while. I don't know why, maybe that there was hope that we were going to see different in the new quarter, but I mean, they are what they are. The fintech business, it's not nothing, but there are dozens of software vendors that'll give you banking as a service. Inevitably, these faux banks come and go left and right. There isn't really any differentiators. That software business always seemed a little suspect to me. If you want a great fintech bank story, buy Live Oak. Don't buy SoFi. SoFi is a retail bank, and at some point, we should value it like one.

Travis Hoium: Rachel, do you see this quarter similarly, or do you look at these? Not only did they grow members, but they actually grew products faster than members, which tells you that their uptake on those products is a little bit higher. Getting more people in the ecosystem and getting them to use SoFi more.

Rachel Warren: Yeah, I have a few thoughts on this. And I don't necessarily think you can value SoFi the same way you would legacy banks. But I do think there's a few very practical reasons why we've seen some of the pressure on the stock. I mean, going back to the quarter, they added over 1 million new members in the quarter alone. Their base is just shy of 16 million people on that banking side. Management raised SoFi is full-year revenue outlook, so that core machine seems to be resilient. Now, it was interesting. I think one of the things investors didn't like was, of course, the tech platform segment that dropped 23% in terms of revenue. That was largely because we saw a major enterprise client that had left the platform at the end of last year, so we've been seeing the impact since then. Full-year profit and earnings per share guidance remained the same. I think we're in a market where a lot of investors are hoping for not only a beat but a raise.

The risk that I would be watching here is SoFi is leaning heavily into capital-intensive lending to fuel its growth story. We saw total loan originations hit a record $14.8 billion that included about $10.7 billion in personal loans. Their CEO is insisting that the borrowers are remaining resilient. Personal loan charge-offs and credit delinquency trends are creeping upward across the industry, however. The reason this matters is SoFi keeps these high-yield loans on its own balance sheet rather than instantly offloading them. If we see a macro downturn, which I'm not saying we will, but it's something to watch for, or even a spike in consumer defaults, that will hit the balance sheet. And we also saw that, you know, tech platform-enabled accounts actually dropped about 16% year over year. They have seen a bit of an impact from the loss of that major enterprise client. Fundamentally, I think this is a good business. I think it's a solid one, and I don't think there's anything wrong that is leading to the pressure on the stock. I think a lot of this is just the machinations of the market. I do think that these are elements to watch, though, if you own SoFi or even are thinking about buying shares.

Travis Hoium: Lou, we have a name for companies that make loans and keep them on their balance sheet. You know what that is? I know where you're going at this, Lou.

Lou Whiteman: It's a bank.

Travis Hoium: Yeah. Let's talk about the products, because maybe I'm showing my ignorance here, but I was really surprised by one stat in there that they said the products per member reached 1.54, which is an all-time high. Now, I've been involved with banks for 30 years, and most banks don't break down the numbers. But if you hire a bank consultant to what they come in, the first thing they're trying to do is to get that number to two or three per member, or customer.

Lou Whiteman: That's why they get you to open a checking account and a savings account.

Travis Hoium: Right,1.54, maybe it just spread. I think it speaks to how much a SoFi is just paper-thin marketing, because that implies that a ton of their customers, relative to a community bank, only have one product. I don't know if that's the flex things is one stat we can use. JPMorgan says that 30% of their retail customers have two or more products. Again, that's not an apples-to-apples. Like I said, most banks don't list that, and it's kind of a weird thing to list, but I'm surprised they're flexing that number because I think there's community banks that I can walk to from my house that would really laugh at that number. It's funny you mentioned that because that is one of the metrics that I do watch with SoFi. But I have also opened accounts at all of these things. If you open, for example, we have a Wells Fargo account. They will charge you a credit, have a checking account unless you also have a savings account ,and you deposit, I think, it's $25 a month into that savings account automatically from the checking account that you also created.

Lou Whiteman: Yeah, I don't want to be too hard on them. They are a good bank, but I do think as investors, and maybe a lot of investors don't look at banks, and so far it has kind of attracted the eye of growth investors just because of the story and where they're based and who runs them. I think there is a lesson here that maybe I am being too hard, but maybe also the market is being too generous. It is really, really hard for a bank to be anything other than a bank, and at some point, there is regression to the mean. I think investors, they both things can be true. It can be a very well-run company with growth that exceeds national averages and still overvalued based relative to the opportunity.

Travis Hoium: Well, we will be keeping an eye on SoFi, and I'm sure Lou and I will keep arguing about the future of the company. We'll see who's right over the next 5 or 10 years. Listen on to this show. When we come back, we're going to check in on the health of the consumer. You're listening to a Motley Fool Hidden Gems Investing.

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Travis Hoium: Welcome back to Motley Fool Hidden Gems Investing. Let's turn our attention to direct consumer spending. There's a number of different companies who are giving us an indication of how healthy the consumer is. Rachel, one that caught your eye was Procter & Gamble. Maybe not the most exciting company, but it's at least people telling us how much people are buying diapers and things, the necessities of life.

Rachel Warren: Right. This is the company that's known for those household name products like Tide, Pampers, the list goes on. It does provide an interesting insight into how consumers are behaving. This is, I will note, not a company that is typically high growth even in the best of macroeconomic times. The margins are slim, a normal year of growth or a quarter, you might see 2% year-over-year gains. But Procter & Gamble actually missed Wall Street's revenue expectations by about 180 million for the quarter. They pulled in about 21 billion in this recent quarter. Volume was flat year over year. Operating margins were actually down. They actually saw profits decline by about 15%.

Why does this matter? Their operating margins were compressed because you're seeing companies like this have to spend significantly on marketing to try to protect their share, and consumer staples operate on very thin incremental margins. Any drop in volume hits profits quickly. But I think what this tells us about the broader consumer is that a lot of average households are really reaching their financial limits. We're not seeing a dramatic economic crash where people stop shopping, but we are seeing very tactical retreats and approaches to how consumers are putting their money to work. They're looking at these legacy companies that put these household name brands forward, and they're not willing to absorb the higher costs.

Companies like Procter & Gamble have implemented over the last few years. They're stretching out their existing household supplies. They're maybe switching to cheaper store brands. They're buying smaller packages. When you're a company like Procter & Gamble, they've certainly, you know, lasted through their fair share of market ups and downs, but it can really come in hard on the margins. I think, if anything, this yields continued ground to the likes of Walmart and Costco, who not only control the physical store shelves, but also have their own private label brands and really robust e-commerce presence as well.

Lou Whiteman: I think Rachel's right. It is the store brands, and I don't know if this says anything about the consumer right now. That's a trend that was going well before this current. This is a denies a 15%-20% a year. I think it just speaks to, and we've seen this with Kraft Heinz. We've seen this with so many. I don't think P&G it's just a terrible place to be right now. Consumers have realized the store. I remember in the ‘80s one joked about it. Well, it's the same product. It's just a different label. That was kind of novel back then. Now it's table stakes. That vast middle, that big consumer brand with a logo has really suffered. Again, I am reluctant to read anything into the health of the consumer. I think what the consumer right now has showed us is they will pay up for select things, like maybe on shoes or something like that. But for most everyday purchases, the fact that it's tied and not Costco brand just doesn't matter. I think that's what we're seeing. We can talk about Visa, too [OVERLAPPING].

Travis Hoium: Well, I wanted to point out the store brand thing, I think is really interesting because that was one of the things when I started at 3M's biggest manufacturing plant in 2005. The interesting thing there was you would have Scotch tape rolling off the line, and then 5 minutes later, there would be Walmart tape rolling off the line. It was literally the exact same equipment. They make it a little bit worse, so it is not quite the same product. You want to have that other product be a little bit higher quality. There is a little bit of a premium there. But it's not like it doesn't hold a piece of paper on the wall. It's not like the diapers are going to be complete garbage. That is something that we've seen for a very long time is that those big companies, the Walmarts, the Costcos, the Targets of the world, have the power to say, Hey, you know what, if you want to be in our store, we want to have our label on. What do you think about Visa though, Lou?

Lou Whiteman: This is another way to look at the consumer, and it's a much healthier look, which is maybe why I'm not sure how to read P&G, but Visa reported 10% U.S. volume growth in payments. That's the fastest growth rate since fiscal 2019. Transaction counts were up to about, say, 10%. This isn't just an inflation story or something like that. There is actual transactions happening. Visa also and Travis, is something we've talked about a lot, but the K-shaped economy. Visa said spending is not isolated to high earners. This is strength across the board. Just last week, the economists over at Bank of America said they believe the K-shaped trade may be reversing in a good way, more spending power across the board with kind of the lower end of that K kind of picking up. I mean, I don't think we know that yet, but Visa's results sort of back up that idea.

Now, look, there was more I mean, I think the World Cup factored in here. There's international experiences, which it's kind of the upper end of [inaudible]. I'm not saying that it is all just perfect and fine. But the quarter was fine. They're forecasting basically status quo for the rest of the year. I continue to think both Visa and Mastercard are undervalued right now because of the disruption potential. I like Mastercard better, but I think that, look, status quo is really good here, and this was at worst a status quo quarter.

Travis Hoium: Things seem to be OK for the consumer right now, and maybe that's OK for the market right now. When we come back, we're going to talk about an energy company that just grew revenue of 166%. You're listening to Motley Fool Hidden Gems Investing.

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Travis Hoium: Welcome back to Motley Fool Hidden Gems Investing. Bloom Energy reported earnings last night. Rachel, this is one of the more interesting stocks out there right now. This stock has been absolutely on fire over the past year or two, because this is one of the few companies that can put energy into a data center at a relatively rapid clip. Revenue was up 166%. What do we need to know about the quarter?

Rachel Warren: It was a great quarter for Bloom Energy. Their adjusted earnings per share also were double what Wall Street was guiding for. They raised the revenue outlook as well, looking ahead to the rest of the year. Obviously, as you noted, the stocks down from its recent peak. I think that this is one of those businesses that is very vulnerable to having volatility based on unrealistic hype cycles. This is a company that's executing well. Worth noting, just about every major AI hyperscaler has now approved their fuel cells to bypass utility grid bottlenecks.

But I do think there is a question of when there might be periods where the AI power trade could run out of gas, where we could see the stock vulnerable to sector profit-taking. I think that might be something we're seeing right now. I mean, there's this question of when we're going to see this transition from buying a catchy AI narrative to really looking at the capital-heavy reality of physical infrastructure. Fuel cells are a physical manufacturing business. Generating energy requires real factories, massive upfront capital, very complex installation timelines.

Now, Bloom's profit margins improved this quarter. Scaling up production to meet the demand that they're facing is a very expensive endeavor. It will limit their short-term cash flows. Now, I don't think that we need to worry that Bloom's business is broken just because they're down since their summer highs, but I do think that we might be coming towards a point where the market could force some of these AI infrastructure companies to justify their valuations with some real-world unit economics. That could be some of it.

Travis Hoium: Lou, it does seem to be kind of a theme where a lot of these pick-and-shovel plays coming back a little bit, because investors are starting to go, Wait a second, how sustainable are these growth rates and margins that we see today?

Lou Whiteman: Let's get that in a second because I think that's exactly right. But yeah, stocks down is 50% from its high, still up 400% over the past year. It's still a double in 2026, even if it is 50% since June, and it still trades at 75 times forward earnings for an industrial company is pretty amazing. Quarter is fine, Rachel's right. Given the AI power demand, anything short of fine would have been a real negative WOW factor, but they held SRV, and that's great. Remaining performance obligations, RPO, that was flat. Remember, Wall Street tends to pay for growth from here, not growth that has occurred. I think that is the easiest way to explain is coming back to Earth, kind of letting some of the air out of tires. It's great. If they can sustain at this level, and I think they probably can, given the demand, that's a fine company, but it doesn't make you a gross stock.

Picks and shovels, I think it's really interesting because picks and shovels, it's so clever and everyone loves to look smart with picks and shovels trades, but they are imperfect trades. They are a trade you do because the underlying asset is overvalued. You know, why if you want to invest in hyperscalers but the hyperscalers are overvalued, how about investing in their suppliers? It is just a secondary way to play a trend. Right now, you can get the hyperscalers at much more attractive valuations than the vendors serving them. Why focus on the vendors? I think the market kind of looking away from somebody's picks and shovels. I think it's just over for now.

Travis Hoium: It'll be interesting to see where that story goes because you're right, that has been a theme, but when a theme needs to become a fundamental reality, eventually for the market, fundamentals eventually drive stock market performance, and Bloom is doing extremely well, but the ROI that we see today may not be sustainable long term.

As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows The Motley Fool's editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. For Lou Whiteman, Rachel Warren, and Dan Boyd behind the glass, I'm Travis Hoium. We'll see you here tomorrow.

Wells Fargo is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Lou Whiteman has positions in Live Oak Bancshares and Walmart. Rachel Warren has no position in any of the stocks mentioned. Travis Hoium has positions in SoFi Technologies. The Motley Fool has positions in and recommends Bloom Energy, Costco Wholesale, JPMorgan Chase, Live Oak Bancshares, Mastercard, Target, Visa, and Walmart. The Motley Fool recommends 3M and Kraft Heinz. The Motley Fool has a disclosure policy.