Online bank SoFi Technologies has admittedly been waving a couple of red flags for the past year.
Despite these concerns, the company's been able to maintain its solid double-digit growth rates, which are expected to persist into the foreseeable future.
Longer-term profit projections should support a valuation and price that's nearly 80% above this stock's present level.
It's been a tough year for shareholders of online bank SoFi Technologies (NASDAQ: SOFI). This stock is down more than 50% from last November's peak, recently reaching a new 52-week low.
Yet it's understandable. The company lost a key technology platform customer at the beginning of this year, resulting in a $28 million, 27% year-over-year decrease in this segment's first-quarter revenue. SoFi also raised its full-year sales outlook with July's Q2 report to a new range of between $4.75 billion and $4.85 billion, but rattled investors by not also upping its profit guidance. The economic backdrop and weak market environment aren't helping matters either.
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Just don't lose sight of the bigger picture. Earnings are still growing, as is SoFi's customer headcount. And all three measures have only scratched the surface of their potential. Indeed, given SoFi Technologies' plausible future, its stock could be at least 50% higher than it is now by the end of 2030. Here's the math.
The headlines have admittedly given the pessimists plenty of fodder to work with of late. While the loss of one technology platform customer (Chime) isn't catastrophic, it could be a sign that others might soon follow. The overall lending market and credit quality in general are also deteriorating. The American Bankers Association's Credit Conditions Index has now been below the pivotal 50 level for seven consecutive quarters.
Now take a step back and look at the bigger picture. SoFi's second-quarter revenue still grew 40% year over year to $1.2 billion, while earnings before interest, taxes, depreciation, and amortization (EBITDA) still improved by 44%. Its total customer count reached a record-breaking 15.8 million in Q2 as well, extending a long-standing trend, with a 35% increase from Q2 2025's headcount.
Analysts don't expect this growth to slow down anytime soon, either. All told, Morningstar expects this fiscal year's projected per-share profit of $0.62 to reach $0.82 next year, en route to $1.35 in 2029 before reaching $1.71 per share in 2030.
Data source: Morningstar. Chart by author.
That's the crux of the long-term bullish argument here. Even assuming a modest valuation of, say, 15 times 2030's expected per-share profit of $1.71 would put the stock somewhere just above a price of $25 apiece. That's nearly 80% better than this ticker's present price. Let's think conservatively, though.
The challenge here is doubt -- most investors aren't convinced this company will continue growing as it has up until this point. Recent headlines haven't exactly inspired confidence either.
Just recognize this stock's recent weakness may be more market-related and cyclical, and less an indictment of the company's plausible future. To this end, the American Bankers Association's 2025 look at U.S. consumer opinions of digital banking indicates that 54% of respondents (of all ages) preferred mobile apps to handle banking matters, while the next-most-popular means of banking is a traditional computer, at 22%. A company like SoFi Technologies, which built its tech from the ground up with this shift in mind, stands ready to benefit from the continued mainstreaming of online banking.
Just understand that SoFi shares aren't going to make a straight line to $25. They could move lower before moving higher again.
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James Brumley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.