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If you are wondering whether SoFi Technologies at around US$17.76 is priced for promise or already ahead of itself, you are in the right place for a clear look at what the current market value might be telling you.
The stock has been volatile recently, with a 6.6% decline over the last 7 days, a 27.8% decline over 30 days, a 35.3% decline year to date, yet a 22.7% return over 1 year and a very large 3 year gain that points to a big reset in how investors have viewed the company over time.
These swings have played out against a backdrop of ongoing interest in SoFi as a US based fintech and online financial services platform, where product expansion and customer growth regularly feature in headlines. Together with ongoing debate about profitability and regulation in digital finance, this mix of enthusiasm and caution helps explain why the share price has moved so sharply at different points.
Despite the share price history, SoFi currently has a valuation score of 0 out of 6, which suggests that on our standard checks it does not screen as undervalued. Next, we will walk through the usual valuation methods, then finish with a more complete way to think about what the market might be pricing in.
SoFi Technologies scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
The Excess Returns model looks at how much value a company can create above the return that shareholders require, using its equity base and earnings power as the core inputs.
For SoFi Technologies, the model uses a Book Value of $8.26 per share and a Stable EPS of $0.88 per share, based on weighted future Return on Equity estimates from 8 analysts. The Average Return on Equity is 9.93%, which is compared with a Cost of Equity of $0.69 per share. The gap between what the equity is expected to earn and what investors require is the Excess Return, which here is $0.18 per share. A Stable Book Value of $8.85 per share, again sourced from 8 analysts, anchors the long term equity base used in the calculation.
Putting these inputs together, the Excess Returns model produces an intrinsic value of about $13.01 per share. Against a current share price around $17.76, this indicates the stock is roughly 36.5% overvalued on this framework.
For a company that is generating positive earnings, the P/E ratio is a straightforward way to see how much you are paying for each dollar of profit. It reflects what the market is willing to pay today relative to current earnings, which is often where many investors start when they compare stocks.
What counts as a “normal” or “fair” P/E depends heavily on how the market views a company’s growth potential and risk. Higher expected growth or lower perceived risk can justify a higher multiple, while slower growth or higher risk usually point to a lower one.
SoFi Technologies currently trades on a P/E of 47.06x. That is well above the Consumer Finance industry average of 8.65x and also above the peer group average of 13.78x. Simply Wall St’s Fair Ratio for SoFi, which is 25.86x, goes a step further by estimating the P/E that might make sense given the company’s earnings growth profile, industry, profit margins, market cap and specific risks. Because it blends these factors, the Fair Ratio can be more tailored than a simple comparison with sector or peer averages.
With the current P/E of 47.06x compared with a Fair Ratio of 25.86x, the stock screens as expensive on this metric.
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, where you combine your view of SoFi Technologies with your own numbers by linking the company’s story to a simple forecast for revenue, earnings and margins. This then flows through to a Fair Value you can compare with today’s price.
On Simply Wall St’s Community page, Narratives give you a clear structure to set out that story, plug in assumptions, see the implied Fair Value, and then decide whether the current market price looks high or low relative to your view, without needing a spreadsheet.
Narratives also update automatically when fresh information, such as news or earnings releases, is added to the platform. This helps your Fair Value view stay in sync with the latest data instead of going out of date.
For SoFi Technologies, one investor might build a bullish Narrative around a Fair Value near US$39.98 based on higher revenue growth and margins, while another might anchor a more cautious Narrative around US$8.92. This shows in a very concrete way how different assumptions about the same company can lead to very different conclusions about whether the stock currently looks expensive or not.
For SoFi Technologies however we will make it really easy for you with previews of two leading SoFi Technologies Narratives:
On Simply Wall St these sit side by side so you can see how different assumptions on growth, margins and risk translate into very different fair values.
🐂 SoFi Technologies Bull Case
Fair value in this bullish Narrative: US$39.98 per share
Current price as a share of that fair value: around 55.6%, which implies SoFi is about 44.4% below this Narrative fair value on the chosen assumptions
Revenue growth used in this Narrative: 33%
Frames SoFi as a financial services platform aiming for scale, with the bank license, technology stack and product breadth all working together over the next decade.
Assumes strong revenue growth and margin expansion as more members adopt multiple products, with technology and fee based services playing a larger role alongside lending.
Uses these inputs to support a fair value near US$39.98, with the view that the current market price leaves room if those optimistic growth and profitability assumptions play out.
🐻 SoFi Technologies Bear Case
Fair value in this cautious Narrative: US$14.00 per share
Current price relative to that fair value: about 26.9% above, which implies SoFi is 26.9% over this Narrative fair value on the chosen assumptions
Revenue growth used in this Narrative: 15.27%
Describes SoFi as a digital financial platform that increasingly looks like a bank, with membership growth, product breadth and balance sheet usage all in focus.
Highlights sensitivities around net interest margin, credit cycles, regulation and competition, and points out that expectations and technical factors can leave the stock exposed to pullbacks.
Arrives at a fair value around US$14.00, so on these more measured growth and risk assumptions the current price screens as rich.
Together, these Narratives bracket a wide fair value range, which is a useful reminder that your own view on growth, margins and risk is what ultimately determines whether SoFi looks attractive or not at today’s price.
If you want to see how other investors connect their story to the numbers, have a look at the full set of Narratives for SoFi and consider building your own version that reflects your expectations and risk comfort.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
