Is Now the Right Time to Reassess SoFi After 101.6% Rally in 2025?

• Wondering if SoFi Technologies is undervalued, overhyped, or just getting started? You are not alone, and plenty of investors are searching for clues about whether the current share price is justified.
• In just the last week, SoFi shares have climbed 13.1%. However, that follows a rollercoaster month during which the stock dropped 7.8%. Looking at the bigger picture, it is up an eye-opening 101.6% year-to-date.
• Media coverage has focused on SoFi's aggressive push into personal finance, with headlines highlighting its new product launches and expansion plans. Industry analysts are also evaluating the impact of regulatory changes, which is contributing to market speculation and trading volatility.
• When it comes to valuation checks, SoFi scores a 0 out of 6 on our valuation checklist. This means it currently does not pass any of the “undervalued” benchmarks investors typically look for. Before drawing conclusions from traditional valuation metrics alone, it is important to examine how these methods work and explore a fresh perspective on what makes a stock truly compelling at the end of this article.

SoFi Technologies scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: SoFi Technologies Excess Returns Analysis

The Excess Returns model is a valuation method that measures how much profit a company generates with its invested capital beyond what it would cost to raise that capital, which is known as the "cost of equity." This approach is useful for businesses like SoFi Technologies that reinvest earnings to fuel growth. It helps investors assess whether those investments create meaningful value over time.

For SoFi Technologies, the analysis reveals that its Book Value sits at $7.29 per share, with a Stable EPS of $0.69 per share. These figures are sourced from weighted future Return on Equity estimates by five analysts. The company's Cost of Equity is calculated at $0.61 per share, resulting in an Excess Return of $0.07 per share. Its average Return on Equity is 8.97%, and analysts estimate a Stable Book Value of $7.68 per share based on projections from seven analysts.

Despite these positive signals, the Excess Returns model calculates an intrinsic discount, indicating that the current share price is about 208.1% above the estimated fair value. This suggests SoFi stock may be dramatically overvalued based on this approach, signaling caution for investors relying on traditional excess returns metrics.

Result: OVERVALUED

Our Excess Returns analysis suggests SoFi Technologies may be overvalued by 208.1%. Discover 923 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for SoFi Technologies.

Approach 2: SoFi Technologies Price vs Earnings

For profitable companies, the Price-to-Earnings (PE) ratio is a popular and practical valuation metric. It shows how much investors are willing to pay for each dollar of earnings and offers a quick, apples-to-apples way to compare companies' market valuations. A higher PE ratio can reflect optimism about future growth, while a lower ratio may signal perceived risks or slower prospects.

SoFi Technologies currently trades at a PE ratio of 53.7x. To put that into perspective, the average PE ratio among its Consumer Finance industry peers is 15.3x. The broader industry average sits even lower at 9.7x. These benchmarks suggest that the market is pricing in much higher expectations for SoFi’s future earnings than for its competitors.

Simply Wall St’s proprietary “Fair Ratio” helps bring more nuance to this comparison. The Fair Ratio for SoFi, which takes into account not just industry comparables but also key factors like growth rates, profit margins, company size, and risks, is 25.4x. Unlike basic peer or industry comparisons, the Fair Ratio adjusts for the specific realities facing SoFi. It paints a more holistic picture of what a justified valuation multiple should look like.

Comparing SoFi’s current PE ratio of 53.7x to the Fair Ratio of 25.4x, the stock appears to be significantly overvalued based on earnings fundamentals.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1439 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your SoFi Technologies Narrative

Earlier we mentioned that there's an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is your personal story or perspective about a company, in this case, SoFi Technologies, that goes beyond just the numbers. With Narratives, you can outline your assumptions about future revenue, earnings, and margins to create a story-driven financial forecast, which then links directly to your view of the company's fair value.

Narratives help you quickly see how your expectations compare to those of others and whether the current price matches your view of where the company is headed. They are available on Simply Wall St's Community page, used by millions of investors to make decisions grounded in both data and interpretation. Whenever new events or earnings updates occur, Narratives are updated in real time so your story and fair value estimate always stay relevant.

For example, one investor may believe SoFi’s rapid product adoption could justify a fair value as high as $30.00 per share, while another may worry about margin pressure and see only $6.00 as justified. Narratives let both perspectives clearly see how and why they differ, and help you decide if today is the right time to buy, hold, or sell.

Do you think there's more to the story for SoFi Technologies? Head over to our Community to see what others are saying!

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.

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