Is Now the Best Time to Buy SoFi Stock or the Worst?

SoFi Technologies' (NASDAQ: SOFI) has had some major ups and downs since going public in 2020. It debuted on the markets as one of a slew of special purpose acquisition companies (SPAC) at the time, and it was just another unprofitable tech stock garnering enthusiasm in a strong bull market.

After tanking with other tech stocks and SPACs not too long after, it survived, thrived, and became profitable. It had an incredible three-year run, ganing 468% from 2023 through 2025, but it's now 50% off its all-time high.

Is that a sign of weakness, or an amazing opportunity to buy?

Image source: SoFi.

A top bank disruptor

As a digital bank, SoFi is resonating with a core constituency of young, upwardly mobile professionals who prefer it over large, legacy banks. It's focused on traditional, lucrative financial services, which provide stability, but it's also innovating with specialized products that help it stand out. Plus, it's relatively small, with an enormous opportunity.

These are features the market has prized, but most likely, the stock has soared thanks to the company continuing to report fantastic growth and rising earnings.

Some first-quarter highlights:

• A 41% year-over-year increase in sales, an acceleration.
• Earnings per share (EPS) increased from $0.06 to $0.12.
• Record new additions of 1.1 million, a 35% year-over-year increase.
• Product growth outpaced new members, up 39%.

Several factors have converged to send the stock down this year, starting with worries about the valuation in light of a potential slowdown, then a with a shocking short-seller report, and after the earnings report, some concerns about the business. According to CEO Anthony Noto, the market was disappointed that SoFi didn't raise full-year guidance after such phenomenal results. He addressed that by pointing out that the original guidance assumed two rate cuts this year, and the new guidance assumes no rate cuts, without being lowered.

There were several other results the market may not have liked, including an increase in loans held on the books and low growth in the Tech Platform segment.

In other words, although it was an excellent report overall, there were several points that left the market unenthused. And at a high valuation, that makes a difference.

The best time to buy?

Although one quarterly earnings report is only a snapshot in time, and a tiny part of a long story, it gives investors a glimpse into how things are going. While it's important for shareholders to pay attention to each part of the story, the long-term trends tell you how the company is evolving. It sounds to me like the market is nitpicking and losing sight of the bigger picture here, which makes it look like a great time to buy. Since the latest drop, it trades at a P/E ratio of 37. As good as it makes you feel as an investor to see stocks soar, you want to buy when the price is low.

Keep in mind, though, that this is a long-term play, and as a young growth stock, there are bound to be moments like this on the way up. The stock isn't doing all that bad; it's still up 28% over the past year, and if it does raise guidance next quarter, it could soar again.

Jennifer Saibil has positions in SoFi Technologies. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.