Key Morningstar Metrics for SoFi Technologies
- : $19.00
- : ★★★
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Morningstar Economic Moat Rating
: None
-
Morningstar Uncertainty Rating
: Very High
What We Thought of SoFi Technologies’ Earnings
SoFi Technologies SOFI reported strong revenue and earnings growth in the first quarter, but reading deeper into the results, there were things to dislike. Net revenue increased 43% from last year, and diluted earnings per share increased to $0.12 from $0.06. The results translate to a return on tangible equity of 7.6%.
Why it matters: Despite strong year-over-year growth, SoFi’s shares are trading more than 10% lower on April 29. This does not surprise us, as the quarter saw surprisingly poor performance from the firm’s technology platform segment and a deceleration in its loan platform business, which we expected.
- SoFi’s technology platform revenue fell nearly 39% from last quarter to $75.1 million due to the loss of a major client. This segment has generally been SoFi’s weakest performer, but 2025 saw improving results, particularly in the second half of the year, which has now been more than reset.
- Similarly, SoFi’s loan platform business saw a sharp sequential decrease in revenue, falling to $140.8 million from $193.7 million last quarter. The primary culprit was lower volume being sold through the channel, with origination volume falling to $3.0 billion from $3.9 last quarter.
The bottom line: We will maintain our $19 fair value estimate for SoFi. Following the market’s negative reaction to earnings, we think the shares are modestly undervalued, but we note our Very High Uncertainty Rating.
- While the drop in SoFi’s loan platform revenue was notable, this was in line with our expectations, as our model includes a 40% reduction in loan platform revenue from the fourth-quarter 2025 run rate by 2027.
- SoFi is indirectly exposed to the health of the private credit industry, as firms like Blue Owl have been major sources of demand for its loans. That said, SoFi’s loans are still valuable assets, and new buyers could replace private credit demand, though pricing would suffer regardless. Additionally, SoFi can always retain more loans.
Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.
The author or authors do not own shares in any securities mentioned in this article.
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