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SoFi Technologies: Diversification And Strength Make It A Buy

SoFi Technologies' innovative digital platform, targeting millennials and Gen-Z, drives strong membership growth and cross-selling opportunities, enhancing profitability and scalability. The capital-light business model and strategic partnerships, such as with Blue Owl Capital, enable SoFi to issue more loans and diversify revenue sources. Financial Services and Technology segments are growing rapidly, now constituting 47% of total revenue, showcasing the potential of SoFi's fee-based model.

SoFi Technologies (SOFI -0.70%) is becoming a one-stop destination for financial services. In its latest earnings report, the fintech beat expectations on revenue and earnings, and its loan business was particularly strong.

SoFi Technologies (SOFI) has been one of the stocks most watched by Zacks.com users lately. So, it is worth exploring what lies ahead for the stock.

Despite consistent revenue and EPS beats, SOFI's stock often drops post-earnings, but its long-term fundamentals and growth potential are steadily improving. Q1 highlights include 20% YoY revenue growth, 34% YoY new members, and a 67% YoY increase in fee-based revenue, showcasing strong profitability and margin growth. SOFI's diversified financial services and tech platform, including Galileo, position it as a fintech, not just a bank, with significant undervaluation compared to peers.

Consumer lending stock SoFi Technologies Inc (NASDAQ:SOFI) is up 2% at $12.96 at last glance.

Banking disruptor SoFi Technologies (SOFI 1.44%) has grown at an impressive pace in roughly four years since it became a publicly traded company. The company's membership base has more than tripled since the end of 2021, SoFi's banking platform has grown from zero at the start of 2022 to more than $27 billion in consumer deposits today, and its adjusted EBITDA in 2024 was about 23 times what it was just three years prior.

Companies using technology to disrupt the traditional financial services sector stand to capitalize on a significant growth opportunity. PayPal (PYPL 2.81%) and SoFi Technologies (SOFI 1.44%) are recognized as fintech leaders that have found success in carving out distinct niches within the evolving landscape.

SoFi Tech. reported strong earnings and 33% growth, yet the stock fell due to market focus on GAAP EPS and technology platform struggles. The fintech's growth is driven by financial services and fee-based revenue, reducing reliance on net interest income and credit risk. SoFi plans to reenter the crypto market and expand its subscription service, offering significant growth opportunities and potential valuation multiple expansion.

SoFi's Q1 2025 revenue surged 33% YoY to $771M, with adjusted EBITDA rising 46% to $210M at 27% margin. Fee-based revenue reached a record $315M, up 67% YoY, now representing 41% of total revenue, de-risking the business model. LPB originated $1.6B for partners like Fortress, generating $96M in revenue with a 4.7% take rate.