3 Reasons to Buy SoFi Stock Like There’s No Tomorrow

To call SoFi‘s (SOFI -5.72%) growth story an impressive one doesn’t really do the company justice. Since going public in 2021, SoFi’s membership based has increased from 3.4 million to more than 10 million, and it has evolved from a relatively small lender into a full-featured online bank. But even with the impressive growth, SoFi is still a relatively small financial institution. Just for context, SoFi has roughly 1% of the deposit base of Bank of America (NYSE: BAC).

1. SoFi is building a capital-light, low-risk revenue stream

SoFi makes billions of dollars in personal loans with its own capital and has recently started to build out its loan platform business (LPB), which originates loans on behalf of third parties and also offers loan servicing on a third-party basis. This generates a stream of capital-light fee income for SoFi, without adding to its credit risk, and it is scaling at an impressive rate.

In the fourth quarter, SoFi originated or referred $1.1 billion in third-party loan volume. The loan platform business produced $63.2 million in fee income from this and also produced $3.6 million in servicing fees. This is a significant portion of SoFi’s revenue, and it could get significantly larger in the next few years.

2. The company is winning with technology

SoFi has said that it aims to become the “Amazon Web Services of fintech.” In other words, it wants to provide the infrastructure for other companies’ fintech needs on a wide scale, and the main way it wants to accomplish that is through its Galileo technology platform that provides innovative financial solutions for enterprise (business) clients.

In 2024, the number of accounts powered by Galileo increased by 15% to 168 million, an acceleration over 2023’s growth rate, and the platform’s margin is improving quickly. In fact, in 2024 the technology platform’s contribution profit grew by 34% year-over-year, significantly faster than its 12% revenue growth rate.

Plus, Galileo has had several big wins recently that are not yet reflected in the numbers. First, the platform was selected by the U.S Treasury Department as the processor for the Direct Express prepaid debit card program for federal benefits that are used by 3.4 million people. It also signed an agreement to power “existing and new capabilities” for a large U.S. financial services company. And perhaps most significantly, Galileo signed an agreement to power a co-branded debit card program for a leading hotel rewards program, the first of its kind on SoFi’s platform.

3. SoFi’s efficiency could improve sharply

The most rapid growth within SoFi’s business in recent years has been on the banking side of the business. For example, in 2024, the number of SoFi Money (checking and savings) customers grew by 51%, while the number of personal loans grew by about half of that rate. At first, this might not sound like a great thing, considering how the company’s lending products are the key profit drivers.

However, this has created a more productive business structure that should allow SoFi to become far more efficient. In 2021, SoFi had 3.8 financial services products (bank accounts, investment accounts, etc.) for every loan. Now, the ratio is 6.3-to-one. As the financial services side of the business grows, it creates more of a natural marketing funnel for the company’s loan products and third-party loan platform. Customer acquisition has been a cost SoFi needs to improve, and the more opportunities it has to sell products to existing customers, the more efficient the process can be.

To be sure, this isn’t an exhaustive list, and there are other potential catalysts that could drive SoFi’s stock higher. For example, I believe the company is just starting to scratch the surface of its potential when it comes to credit card products. Plus, the company could see margins expand sharply as interest rates gradually come down. But these three are especially encouraging in 2025 and beyond, and are big reasons why SoFi has become a major position in my portfolio.