Should Investors Rethink SoFi Stock After Its 85% Rally and New Account Milestone?

Thinking about what to do with your SoFi Technologies shares or wondering whether to jump in at today’s price? You are not alone. The company has taken investors on quite a ride recently, with the stock climbing 3.8% over the last week and posting an eye-popping 85.4% gain year to date. If you have been holding on for the long term, the results look even wilder: a 190.7% jump over the past 12 months and an astonishing 444.5% surge over three years. All that momentum has kept SoFi top of mind on trading forums, and market chatter has only intensified as alternative lending platforms draw renewed attention amid shifting interest rates and a growing appetite for digital financial tools.

With these enormous gains, it is understandable if you are trying to figure out whether SoFi remains a bargain or has simply raced ahead too quickly for its own good. On the surface, its valuation looks stretched. Our latest assessment scores SoFi a value score of 0 out of 6, meaning it is not considered undervalued by any of the standard valuation checks we use. But before you make any decisions, it is worth digging into what those checks actually examine, and more importantly, how to go beyond those numbers to get a full picture of SoFi’s worth. Let’s walk through the classic valuation approaches, and then I will share a perspective on valuation you will not want to miss.

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 valuation model measures whether a company generates income well above what investors could earn by putting their capital elsewhere, taking into account the cost of equity. Essentially, it analyzes how efficiently SoFi turns shareholders’ money into profit beyond a basic return hurdle.

For SoFi Technologies, the numbers tell a cautious story. The company’s Book Value stands at $6.16 per share and its Stable EPS at $0.59 per share, based on weighted future Return on Equity estimates from six analysts. With a Cost of Equity nearly identical at $0.59 per share, SoFi’s calculated Excess Return is effectively $0.00 per share. This aligns with its average Return on Equity of 8.08% and a projected Stable Book Value of $7.33 per share (sourced from seven analysts).

Given these figures and the methodology, the Excess Returns model estimates SoFi’s intrinsic value at just $7.38 per share. With the current market price more than 255% higher than this valuation, SoFi appears significantly overvalued by this approach.

Result: OVERVALUED

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

Our Excess Returns analysis suggests SoFi Technologies may be overvalued by 255.1%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: SoFi Technologies Price vs Earnings (PE Ratio)

The Price-to-Earnings (PE) ratio is a widely used valuation tool for profitable companies, making it especially useful when analyzing SoFi as it continues to move toward sustainable earnings. The PE ratio indicates how much investors are willing to pay today for each dollar of the company’s earnings. In general, companies with higher expected growth or lower risk tend to command higher PE multiples. Those with slower growth or more uncertainty typically see lower ratios as the market prices in those factors.

Currently, SoFi Technologies trades at a PE ratio of 55.84x. For context, this is well above the average PE of its industry peers, which sits at 9.51x, and also exceeds the peer group average PE of 52.86x. This suggests that investors are pricing in significant growth or expecting stronger profitability ahead.

However, instead of only focusing on averages, Simply Wall St’s proprietary “Fair Ratio” provides a more tailored benchmark. This metric is calculated by factoring in critical attributes such as SoFi’s earnings growth, profit margins, risks unique to the business, as well as its industry and relative size. For SoFi, the Fair Ratio is 23.18x, which is below both its current PE and peer benchmarks.

Because the actual PE ratio is much higher than the Fair Ratio, this approach suggests SoFi is currently overvalued based on its underlying fundamentals and risk profile.

Result: OVERVALUED

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

Upgrade Your Decision Making: Choose your SoFi Technologies Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is a simple, approachable way for you to frame your personal view of a company by connecting its story, such as growth prospects, business strategies, and risks, with your own expectations for its future revenue, margins, and ultimately, fair value.

Narratives go beyond the numbers, helping you articulate not just what you think SoFi Technologies is worth, but why. They combine the company’s story, your assumptions about its future, and a projected fair value all in one place. This makes your investment thesis transparent and actionable. On Simply Wall St’s Community page, millions of investors use Narratives to see, create, and update their perspectives in seconds, and it is accessible to all skill levels.

With Narratives, you can compare your Fair Value to the current market Price, giving you a clear framework to decide whether to buy, hold, or sell. Even better, Narratives are dynamic and update automatically as new news, earnings results, or market shifts occur. Your perspective therefore always reflects the latest information.

For example, some SoFi Narratives project a best-case fair value as high as $30 per share, while the most cautious see it as low as $6, demonstrating how different investors’ stories and forecasts shape their outlooks.

Do you think there's more to the story for SoFi Technologies? Create your own Narrative to let the Community know!

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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