SoFi's Capital Raise Triggers Stock Volatility
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Should l Buy SOFI?
Source: Fool
- Capital Raise Impact: SoFi's announcement of a $1.5 billion stock offering at $27.50 per share led to a 17% drop in stock price in January 2026, highlighting market sensitivity to dilution effects on existing shareholders.
- Revenue Loss Analysis: The suspension of federal student loan payments resulted in SoFi losing between $300 million and $400 million in revenue and $150 million to $200 million in profit from March 2020 to March 2023, raising investor concerns about future profitability.
- Earnings Outlook Improvement: Despite challenges, SoFi expects net income of $160 million in Q1 2026, a 125% increase from Q1 2025, and a projected annual net income of $825 million for 2026, reflecting significant growth potential.
- Valuation Metric Changes: With a current PEG ratio of 1.51, SoFi is technically overvalued, yet this is lower than previous quarters' ratios, potentially allowing the company to meet and exceed expectations in the coming quarters, alleviating selling pressure.
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Analyst Views on SOFI
Wall Street analysts forecast SOFI stock price to rise
14 Analyst Rating
5 Buy
6 Hold
3 Sell
Hold
Current: 19.610
Low
18.00
Averages
28.31
High
38.00
Current: 19.610
Low
18.00
Averages
28.31
High
38.00
About SOFI
SoFi Technologies, Inc. is a member-centric, one-stop shop for digital financial services. The Company, through its lending and financial services products, allows members to borrow, save, spend, invest and protect their money. The Company's segments include Lending, Technology Platform and Financial Services. The Lending segment offers personal loans, student loans, home loans and related servicing to help its members with a variety of financial needs. Its platform supports the full transaction lifecycle, including credit application, underwriting, approval, funding and servicing. The Technology Platform segment provides services through a diversified suite of offerings which include an event and authorization platform accessed via application programming interfaces, a cloud-native digital and core banking platform and services related to both platforms. The Financial Services segment offers a suite of financial services solutions, including SoFi Money and SoFi Invest.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
SoFi's Profitability Rises but Stock Faces Pressure
- Profitability Improvement: SoFi achieved profitability in 2024, with projected net income of $825 million for 2026, representing a 72% increase from 2025, indicating significant progress in financial performance despite market pressures.
- Capital Expansion Impact: In December 2025, SoFi announced a $1.5 billion stock offering priced at $27.50 per share, leading to dilution for existing shareholders and a 17% drop in stock price in January 2026, highlighting market sensitivity to new share issuances.
- Revenue Loss: SoFi reported a loss of $300 million to $400 million in revenue and $150 million to $200 million in profit due to the suspension of federal student loan payments from 2020 to 2023, which has made investors cautious about its future performance.
- Market Expectations and Valuation: Although SoFi's price/earnings-to-growth (PEG) ratio stands at 1.51, indicating overvaluation, historical data shows a more moderate valuation compared to previous quarters, suggesting that if the company effectively utilizes new capital, selling pressure may ease in the coming quarters.
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SoFi's Capital Raise Triggers Stock Volatility
- Capital Raise Impact: SoFi's announcement of a $1.5 billion stock offering at $27.50 per share led to a 17% drop in stock price in January 2026, highlighting market sensitivity to dilution effects on existing shareholders.
- Revenue Loss Analysis: The suspension of federal student loan payments resulted in SoFi losing between $300 million and $400 million in revenue and $150 million to $200 million in profit from March 2020 to March 2023, raising investor concerns about future profitability.
- Earnings Outlook Improvement: Despite challenges, SoFi expects net income of $160 million in Q1 2026, a 125% increase from Q1 2025, and a projected annual net income of $825 million for 2026, reflecting significant growth potential.
- Valuation Metric Changes: With a current PEG ratio of 1.51, SoFi is technically overvalued, yet this is lower than previous quarters' ratios, potentially allowing the company to meet and exceed expectations in the coming quarters, alleviating selling pressure.
See More
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- AI Market Growth: The AI market is expected to continue its growth trajectory in 2026, driving up demand for related technologies, thereby increasing the importance of cybersecurity, which necessitates greater investment from businesses to counter potential threats.
- Cybersecurity Market Potential: As AI technologies become more widespread, the cybersecurity market may experience even greater growth opportunities, with companies significantly increasing their spending on data and system security, thus enhancing the overall market size.
- Stock Market Volatility Analysis: The current stock market is experiencing turbulence, prompting investors to look for potential buying opportunities, particularly in cybersecurity firms like CrowdStrike, which is anticipated to rebound in price during market corrections.
- Investment Strategy Recommendations: The video outlines specific buy price targets that will provide investors with clear entry points, especially during market downturns, making it crucial to seize opportunities in high-quality cybersecurity stocks for long-term gains.
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Investment Comparison: PayPal vs. SoFi
- PayPal's Low Valuation: PayPal trades at less than 8 times forward earnings, significantly lower than most fintech stocks, yet its recent quarterly results fell short of expectations, leading to a more than 20% drop in share price.
- Struggling Growth Business: The company's branded checkout segment has seen growth slow from 6% last year to just 1% this quarter, indicating challenges in key growth areas and suggesting a lengthy recovery ahead.
- SoFi's Strong Performance: In stark contrast, SoFi's stock has risen 41% over the past year; despite a recent pullback due to earnings missing expectations, it still trades at a premium 32 times forward earnings, reflecting market confidence in its growth.
- Future Growth Expectations: SoFi anticipates over 30% revenue growth and 38% to 42% earnings growth in the coming years, and if these targets are met, its stock could maintain a high valuation and rise accordingly.
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Analysis of Investment Opportunities in Digital Banks
- Latin American Market Potential: Nu Holdings offers various banking products in Latin America, achieving over 60% customer coverage in Brazil and 13 million and 4 million customers in Mexico and Colombia, respectively, indicating strong growth potential in the unbanked population, with revenue expected to rise 123% from 2025 to 2028.
- Profitability Improvement: Nu's net income margin reached 18.8% in Q3, a significant improvement from a net loss in the same period of 2021, with monthly revenue per active customer at $13.40, far exceeding the $0.90 cost to serve, showcasing excellent unit economics and risk management capabilities.
- Innovation-Driven Growth: SoFi Technologies achieved adjusted net revenue of $3.6 billion in 2025, up 38% year-over-year, and added 1 million net new customers in Q4, bringing total membership to 13.7 million, enhancing customer stickiness through a diverse product offering.
- Future Growth Expectations: SoFi's adjusted net income grew by 112% in 2025, with projections for a 72% increase in 2026, and management forecasts a compound annual growth rate of 40% in earnings per share from 2025 to 2028, indicating strong profitability growth potential.
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- Alphabet Cloud Growth: Despite a 11% decline in Alphabet's (GOOG) stock since early February, its cloud computing segment grew 48% year-over-year in Q4 2025, with operating profits up 53%, indicating strong potential in AI and expected sustained growth in the coming quarters.
- Search Business Stability: Alphabet's search business remains robust amid economic uncertainty, with Google Services' operating income increasing by 22% last quarter, demonstrating that its core business continues to be a strong cash flow source supporting future investments.
- SoFi Customer Growth: SoFi Technologies (SOFI) has surpassed 13.6 million customers, an 8% increase from Q3, reflecting the success of its online banking model in a digital environment, even as its stock has fallen nearly 40% from its November peak.
- Analyst Optimism: Despite waning market confidence in SoFi, analysts maintain a consensus price target of $26.94, representing a 37% upside from current levels, indicating recognition of its future growth potential and an anticipated stock rebound soon.
See More
SoFi's Profitability Rises but Stock Faces Pressure
- Profitability Improvement: SoFi achieved profitability in 2024, with projected net income of $825 million for 2026, representing a 72% increase from 2025, indicating significant progress in financial performance despite market pressures.
- Capital Expansion Impact: In December 2025, SoFi announced a $1.5 billion stock offering priced at $27.50 per share, leading to dilution for existing shareholders and a 17% drop in stock price in January 2026, highlighting market sensitivity to new share issuances.
- Revenue Loss: SoFi reported a loss of $300 million to $400 million in revenue and $150 million to $200 million in profit due to the suspension of federal student loan payments from 2020 to 2023, which has made investors cautious about its future performance.
- Market Expectations and Valuation: Although SoFi's price/earnings-to-growth (PEG) ratio stands at 1.51, indicating overvaluation, historical data shows a more moderate valuation compared to previous quarters, suggesting that if the company effectively utilizes new capital, selling pressure may ease in the coming quarters.
See More
SoFi's Capital Raise Triggers Stock Volatility
- Capital Raise Impact: SoFi's announcement of a $1.5 billion stock offering at $27.50 per share led to a 17% drop in stock price in January 2026, highlighting market sensitivity to dilution effects on existing shareholders.
- Revenue Loss Analysis: The suspension of federal student loan payments resulted in SoFi losing between $300 million and $400 million in revenue and $150 million to $200 million in profit from March 2020 to March 2023, raising investor concerns about future profitability.
- Earnings Outlook Improvement: Despite challenges, SoFi expects net income of $160 million in Q1 2026, a 125% increase from Q1 2025, and a projected annual net income of $825 million for 2026, reflecting significant growth potential.
- Valuation Metric Changes: With a current PEG ratio of 1.51, SoFi is technically overvalued, yet this is lower than previous quarters' ratios, potentially allowing the company to meet and exceed expectations in the coming quarters, alleviating selling pressure.
See More
2026 Outlook: AI and Cybersecurity Market Insights
- AI Market Growth: The AI market is expected to continue its growth trajectory in 2026, driving up demand for related technologies, thereby increasing the importance of cybersecurity, which necessitates greater investment from businesses to counter potential threats.
- Cybersecurity Market Potential: As AI technologies become more widespread, the cybersecurity market may experience even greater growth opportunities, with companies significantly increasing their spending on data and system security, thus enhancing the overall market size.
- Stock Market Volatility Analysis: The current stock market is experiencing turbulence, prompting investors to look for potential buying opportunities, particularly in cybersecurity firms like CrowdStrike, which is anticipated to rebound in price during market corrections.
- Investment Strategy Recommendations: The video outlines specific buy price targets that will provide investors with clear entry points, especially during market downturns, making it crucial to seize opportunities in high-quality cybersecurity stocks for long-term gains.
See More
Investment Comparison: PayPal vs. SoFi
- PayPal's Low Valuation: PayPal trades at less than 8 times forward earnings, significantly lower than most fintech stocks, yet its recent quarterly results fell short of expectations, leading to a more than 20% drop in share price.
- Struggling Growth Business: The company's branded checkout segment has seen growth slow from 6% last year to just 1% this quarter, indicating challenges in key growth areas and suggesting a lengthy recovery ahead.
- SoFi's Strong Performance: In stark contrast, SoFi's stock has risen 41% over the past year; despite a recent pullback due to earnings missing expectations, it still trades at a premium 32 times forward earnings, reflecting market confidence in its growth.
- Future Growth Expectations: SoFi anticipates over 30% revenue growth and 38% to 42% earnings growth in the coming years, and if these targets are met, its stock could maintain a high valuation and rise accordingly.
See More
Analysis of Investment Opportunities in Digital Banks
- Latin American Market Potential: Nu Holdings offers various banking products in Latin America, achieving over 60% customer coverage in Brazil and 13 million and 4 million customers in Mexico and Colombia, respectively, indicating strong growth potential in the unbanked population, with revenue expected to rise 123% from 2025 to 2028.
- Profitability Improvement: Nu's net income margin reached 18.8% in Q3, a significant improvement from a net loss in the same period of 2021, with monthly revenue per active customer at $13.40, far exceeding the $0.90 cost to serve, showcasing excellent unit economics and risk management capabilities.
- Innovation-Driven Growth: SoFi Technologies achieved adjusted net revenue of $3.6 billion in 2025, up 38% year-over-year, and added 1 million net new customers in Q4, bringing total membership to 13.7 million, enhancing customer stickiness through a diverse product offering.
- Future Growth Expectations: SoFi's adjusted net income grew by 112% in 2025, with projections for a 72% increase in 2026, and management forecasts a compound annual growth rate of 40% in earnings per share from 2025 to 2028, indicating strong profitability growth potential.
See More
2026 Portfolio Reset Strategies Amid Market Volatility
- Alphabet Cloud Growth: Despite a 11% decline in Alphabet's (GOOG) stock since early February, its cloud computing segment grew 48% year-over-year in Q4 2025, with operating profits up 53%, indicating strong potential in AI and expected sustained growth in the coming quarters.
- Search Business Stability: Alphabet's search business remains robust amid economic uncertainty, with Google Services' operating income increasing by 22% last quarter, demonstrating that its core business continues to be a strong cash flow source supporting future investments.
- SoFi Customer Growth: SoFi Technologies (SOFI) has surpassed 13.6 million customers, an 8% increase from Q3, reflecting the success of its online banking model in a digital environment, even as its stock has fallen nearly 40% from its November peak.
- Analyst Optimism: Despite waning market confidence in SoFi, analysts maintain a consensus price target of $26.94, representing a 37% upside from current levels, indicating recognition of its future growth potential and an anticipated stock rebound soon.
See More
