Should You Buy SoFi Stock Right Now?

SoFi stock is a financial services company, which means it's very cyclical. And this stock has essentially remained extremely flat during this month. Even though there's been a lot of volatility in between those two periods, it's essentially gone down to $14, as high as $19, and now we're exactly back to around $16.50, which is where we were a month ago. But the question I wanted to pose is, how long is this going to stay this way? Because although I've been investing in a lot of AI companies, I want to make sure that my portfolio is diversified enough to take advantage of companies that I do believe are going to outperform over time. In this video, is SoFi worth it right now? While the S&P 500 is how I always benchmark my stocks, if you're going to be buying into individual stocks, you need to make sure that they are outperforming the benchmark. Why? Because that's the only reason to invest in individual companies or you should just buy the S&P 500 itself. Over the last 10 years or so, the S&P 500 has returned around 11.3% with the last 5 years being even better than this at around 13.6%. So, because SoFi is a bank, everything depends on their members. If this company is going to be able to beat that 11.3% or 11 to 13%, it's going to need to have the foundation that will beat that 11% growth. That's where members come in. Their members have constantly compounded at around this 34 to 35% range, comfortably beating the S&P. And they're doing this because they're having stronger unaded brand awareness. Customers are telling other friends about their experience on SoFi. Those customers have a great time. They refer more people and the sort of system continues on over and over and over. Their primary product is their SoFi money accounts. This is like the checking account that everyone uses that hopefully sets up direct deposit or SoFi Plus a subscription model. But the types of revenue that we get from this business is all essentially depositbased, right? So that's going to lower their cost of funding. But whenever you have more deposits on SoFi and you have more of your money through this account, well then you need to pay your bills through SoFi. Then you want to send money through SoFi. Then you're also, like I said, SoFi Plus is going to have that subscription revenue. All of this type of revenue is essentially risk-free revenue, which would essentially be the same multiple as what you would put on like a tech stock or really any sort of company that has high margins. But it's not just about SoFi Plus. Once we actually get a cross-ell between SoFi members, whether that's through SoFi Plus, then if you have enough deposits, then you want to potentially open up a SoFi invest account. If you need money, then you're going to go get a loan or a credit card. And if you have additional money to invest a little bit more speculatively, you might get a crypto account or something like this. Because SoFi is going for that full stack approach, it's one of these companies that I believe will continue to innovate over time, enter into every single space in financial services, which has some of the largest TAMs in the world. Speaking of which, personal loans have about $1.1 trillion of outstanding debt in the United States. And yet, SoFi is capitalizing on this because they have some of the best products, offering no origination fees, flexible payback periods, flexible amount of funds that you can end up getting, whether that's between $5,000 or $100,000. And these products are growing even faster than SoFi's members are growing. And they even do this by going externally to other banks to then get those members onto the platform. But that's not even where the large opportunity lies. Obviously, we see consumer credit get up to 1.1 trillion, but mortgages essentially originate $530 billion a quarter. Well, for that, SoFi is a very, very small customer, only doing roughly $1.2 billion a quarter, but this is up from $90 million just 3 years ago. So, the area in which they have the most potential opportunity is their fastest growing area. And whenever you look year-over-year on mortgage originations, we've gone from 500 million up to 1.2 billion. Way, way faster growth than what the big banks are doing. And this is because their product breath continues to strengthen. Their overall understanding of underwriting is getting better. And they're putting on more members onto the platform. This total growth is way outstripping the total growth that we could see versus the S&P 500. Now, multiples are a thing that SoFi needs to potentially pay attention to and for different areas, SoFi does trade at a premium versus other banks, but that's because of their overall growth and that sustained growth rate that's going to take us from essentially 2026 at $4.6 billion up to nearly $8 billion worth of total revenue. We're compounding at a 30% rate. Remember, we're looking to beat that 11 to 14% or 13%. But on EPS, we are essentially compounding earnings at 40% growth rates. These are the things that make me extremely confident over the next 3 years at least that SoFi will be able to assuming that they just keep the current multiple that they have today. If you were to tack on that 40% growth, they should in essence grow at 40% each year. But that's the thing. If SoFi can continue to put up great results year after year after year, that does not deserve the same premium of where we are today. See, SoFi is essentially sitting at the $16.50 range, which is roughly half of where we were at an all-time high, sitting at roughly about $33 per share. Even though we had less earnings, less revenue growth, investors were willing to pay a much higher premium. And that's because the macro environment that we were sitting in, rate cuts were expected, and we did actually see them in 2025. Three separate rate cuts. Now, we're potentially staring down the barrel of rate hikes, which makes SoFi's job harder of originating more loans, more people needing more home loans and access to personal loans and all of these things. It gets much harder as rates end up climbing up, and it makes SoFi's cost of funding even higher, which essentially affects their profitability. But even though SoFi is a cyclical business, those waves go up and down. Macro environments get very hard and then they get very easy and then they get very hard again. The thing that I would sort of try to push whenever I'm talking about SoFi stock is that you want to actually buy it while those macro pressures are being seen ahead because then the stock is essentially cut in half from where we were before. You should buy whenever other people are being skeptical and sell whenever other people are being extremely euphoric. Right now, I'd say we're more skeptical, expecting rate hikes, even though there's a new Fed chairman, Kevin Worsh, coming in that swore to Trump that he is going to cut rates regardless of where we are in this current macro environment. Now, that doesn't necessarily mean that we will get Fed cuts this year and that's why the market is actually pricing that we won't because the Fed is independent and Kevin Walsh and the rest of the committee will make their own decisions. But it's still important to know that Trump definitely wants rate cuts and he wants to essentially give more fire to the stock market because he pins a lot of his success towards the stock market. But also, Kevin Morse was appointed directly by Trump. He put someone in there that is going to fulfill his mission. If that is the case and we get unexpected rate cuts, SoFi stock will correct very quickly. And on top of that, you're going to not only get a potential multiple on SoFi stock, but you're going to get it on a multiple of earnings that is potentially higher than whenever it was last at $33 because they've been continuously growing revenue at 30% rates, adding more members, cross buying those members, continuing to grow in total addressable markets that are some of the biggest markets in the entire US economy. And SoFi is going to essentially bring that all to the bottom line in earnings per share of 40% growth per year for the next three years. But in other SoFi news, we have a lot to cover here. So SoFi ended up showing off SoFi Coach. This is an AI powered financial guide. Think about sort of chat GPT, but built directly in to your SoFi app that is going to help track spending, manage debt, plan for major life goals, and take action on them. One of the interesting things that they saw there is that many of the users who got early access to SoFi Coach were actionably taking the right steps for their financial life, which if you end up seeing that your debt is going down, you're starting to make more money, you're going to tell your friends about this experience on SoFi. But this is essentially what it looks like, like a chat GPT like interface, but it has all of your data within it immediately. So, if it knows that you have more money that you can pay off your credit card with, if it knows, hey, potentially you have way more discretionary spending than other people that are in your sort of spot that are making this type of income, try saving a little bit more or potentially you can have that flexibility to get that puppy that you potentially want or whatever the outcome is that maybe you want to go on vacation, right? So, SoFi Coach looks really interesting and hopefully you guys all get access to that really soon. But SoFi is also pushing into SoFi invest in other different ways like for example three new thematic funds. So Sofi's AI power grid ETF, SoFi blockchain infrastructure ETF and SoFi Robo taxi and autonomous vehicles ETF. All of these ones, CAB, Settle and Amps could potentially be extremely popular. The only one that I would also have wanted to see is like a SoFi physical AI type ETF that I think would have fit in very well with these types of potentials. Like I know blockchain infrastructure is not super popular right now. This AI power grid one could be extremely popular, but yet institutional investors don't care about these small ETFs. I mean those are more to bring on more users onto the platform and make their customers more happy, but it's not going to change the financial needle just yet. So, SoFi institutional investors are taking out the most amount of short interest that they've ever seen on this company. Now, shorting 173 million outstanding shares. This is another opportunity, not necessarily for a full short squeeze, but it does always sort of blindside me whenever the company gets down to these low low prices, but the short interest climbs up. Just as we can get euphoric whenever buying into companies, short sellers can get a little bit euphoric that a company that goes down to 16 can head down to 12 or $8 or $4 even though the financials and the underlying business continue to strengthen over time. On the other hand, there is a level of institutional ownership that is buying into the positive side of SoFi, bringing up that total ownership of over 800,000 total shares, which is obviously outstripping the the short interest side. But remember, that institutional ownership can also include the short interest as well. But regardless, like I said, there's a lot more longs than there is shorts out of that 800,000. Another thing I wanted to highlight was what Upstart just showed off today, and that was their origination volumes for May, showing a massive 52% increase year-over-year and the highest level of not only over the past 3 years, and you can see how much they've grown along with the total daily volume spiking up, having a really, really high amount. This is really interesting to me because SoFi and Upstart have an almost identical product. The way that they end up doing it on the back end is quite different, but the loan platform business is essentially what Upstart does. They originate loans on behalf of other institutions in order to raise this amount of total capital. This is not just Upstart taking on more risk or more loans. Right? Now, this is across hundreds of different banks and asset managers and all of these things that are potentially looking for more credit products right now. This could be because they believe in the macro getting better or pricing on Upstart going down. Who knows the reasons? But this is a very bullish sign for SoFi that originations could pick up quite a lot in Q2 versus what we just saw in Q1. But then I wanted to talk about one of the things that Anthonyto talked about on AIT's podcast. Anthonyto said that they were actually partnering with Mastercard to bring this type of capability, but he didn't say whether or not it was an exclusive offering, and I had a feeling that it wasn't. Now, we ended up seeing Mastercard prove that of course that that's not the case because they have Circle and Paxos issued PYUSD or Ripple's RLUSD and SoFi USD. So, they're on a very short list of only four issued stable coins, but still obviously Circle is definitely going to see a high majority of that overall volume because they're massively bigger than SoFi USD. And they already have massive customers here like CBW Bank and Cross River, which are very interesting. And SoFi just announced that they just hired a new head of international, which honestly I think is a new role for them, Ibrahham Dussy, which could potentially bring SoFi all over the globe, helping people get their money right around the world. So, is SoFi going to LAM? Is it going to the UK? Is it bringing are they going to Europe or the Middle East or where are they headed? Who knows? But Ibraham might end up helping SoFi expand SoFi's presence beyond the United States. This is extremely exciting, but also follows right after they just hired a new head for Galileo, which just came from, I think, a senior vice president role from Visa, which is also quite exciting. But this actually brings me back to when do we start investing aggressively again. Okay, what could go wrong? And it all comes down to what you believe whenever it comes to the Iran conflict, jobs data, and whether or not we get an actual rate hike, a rate cut, or we pause. A pause is perfectly fine. This is what SoFi is essentially guiding for. But an ease would be even better. This would essentially bring up the amount of loans that they could end up giving out. This would essentially lower their costs as a liability to the deposit base. A right hike is not what we want. This would essentially make lending harder. This would essentially make their cost of funding more expensive. This would make a lot of things a little bit more tight for them. Okay? And it's not what they're guiding for. But yet, we ended up seeing ADP private payrolls right now rise above expectations, which actually signals to more of a no need to change. If private payrolls did poorly, that would point to needing rate cuts to support the Federal Reserve's dual mandate of supporting unemployment and also supporting lowering inflation. But it doesn't look like they need to support the job market because everything's going perfectly fine and unemployment is potentially going to head lower and the potential for rate hikes if that inflation goal of 2% is not hit. It doesn't look like it's going to. If the Iran conflict continues or gets any worse, this could potentially signal to the market that oil prices need to climb higher because the straight of Hormuz will remain closed. If that happens, we're almost assuredly going to see rate hikes, which is worse than Sofi's guidance, which could signal for another sell-off. Then going back to my question whether or not you believe the Iran conflict will continue. If you do think that's going to happen, then you might have additional time to wait before you have to buy into SoFi to take advantage of all their growth. Guidance could come out slower than expected and then the market ends up bringing down this company once again. But on the other hand, if you believe that the Iran conflict will come to an end and get a deal for the United States, then potentially this is the time to buy into SoFi. Or if you're like me and you want to wait for some concrete evidence to know which direction we're actually headed with this Iran conflict, then you're going to have to pay a higher price because by the time we have any assurities, the market will have priced SoFi accordingly to whether or not we get no change in rates or potentially we end up seeing rate cuts. So, I'm not selling a single share in SoFi. I'm itching to buy more, but I'm going to hold steady right now and not potentially buy into this dip because there's other opportunities that are just not cyclical like companies in this AI trade that are not worried about rates because the demand is just so unbelievably high. Will SoFi outperform the S&P 500 over a long time? I mean, I definitely think so. Will this company continue to strengthen and become a household brand name? I absolutely think so. And if you have a long time horizon, this is almost like a very strong win if you can stick to it rather than worrying about the potential daily fluctuations in this price. But ladies and gentlemen, thank you all so much for watching. Really do appreciate your time. But until next time, bye for