Is SoFi Yesterday's News?

The thriving digital bank's shares have soared fivefold in just the past three years.

SoFi Technologies (SOFI +1.12%) has been one of the best-performing stocks in the market. Over the past three years, shares of the digital banking powerhouse have soared 402% (as of Nov. 19). Investors have no choice but to become more bullish, given the strong fundamental performance of the business.

But after such a monumental run, is this fintech stock yesterday's news?

Image source: SoFi.

During the third quarter (Q3 ended Sept. 30), SoFi reported financial results that gave shareholders more reasons to cheer. This points to the company's ongoing momentum.

Adjusted revenue jumped 38% year over year to $950 million. This was driven by a monster 50% gain in fee-based revenue, which is viewed as being less risky. Loan originations increased by 57%.

SoFi added 905,000 net new customers, bringing the total number of members to 12.6 million. This figure is more than three times the size of what the business had at the end of 2021. People are gravitating toward SoFi's products and services, with its superior user experience standing out in the competitive banking industry.

SoFi first achieved generally accepted accounting principles (GAAP) profitability in the fourth quarter of 2023. Since reaching this milestone, the bottom line has expanded in remarkable fashion. In 2024, the company reported adjusted net income of $227 million. Management expects SoFi to post $455 million in adjusted net income in 2025.

Critics of SoFi probably didn't think the business would become such a profit-making machine. However, it's clear that SoFi can leverage its operating expenses as it scales up. It helps that there are no physical bank branches to deal with.

From a purely fundamental perspective, SoFi is not even close to being yesterday's news. The company is firing on all cylinders. This is noteworthy, particularly because the economy isn't on the best footing these days. Any investor who looks at SoFi's financials will surely come away impressed. The future is extremely bright.

Today's Change

(1.12%) $0.28

Current Price

$25.19

Investors interested in owning a growing and profitable fintech disruptor must keep an eye on SoFi. But just because the company is performing well doesn't mean the stock is a smart buy. Investors must look at the valuation.

SoFi shares have skyrocketed. And a valid case can be made that the stock is expensive. It trades at a forward price-to-earnings ratio of 44. That's not a bargain, to be sure.

However, SoFi's financial metrics are incredibly encouraging. Given that the business is poised to be much larger five years from now, the current valuation might be justified.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.