SoFi stock drops 12% despite “best year ever”

Key points

• SoFi stock was down as much as 12% Monday.

• The company had a strong year, becoming profitable for the first time.

• The 2025 outlook was a bit disappointing, which sparked the selloff.

The fintech had its first profitable year, yet investors were not impressed. What is driving the selloff?

SoFi Technologies (NASDAQ: SOFI) stock took a hit on Monday, with its stock down about 12% after it reported fourth quarter earnings.

It was a bit of a head scratcher, at least on the surface, as SoFi had a strong quarter and capped off what CEO Anthony Noto called “SoFi’s best year ever.”

SoFi beat revenue and earning estimates in the quarter, with revenue up 19% year over year to $734 million. This crushed consensus estimates of $669 million.

Net income rose almost 600% to $332 million in the quarter, or 29 cents per share. Adjusted earnings were $61 million, or 5 cents per share, which topped estimates of 4 cents per share.

For the full year, it was indeed a breakthrough year for the fintech bank, which specializes in student loans. Let’s take a look at the numbers.

First full year of profitability in 2024

Noto was not exaggerating when he said 2024 was the firm’s best year ever. The stock returned 54% in 2024 and as of January 27, it was up 112% to around $16 per share – and that includes Monday’s selloff.

The company became profitable for the first time ever last year, with huge revenue and earnings gains. For fiscal 2024, SoFi generated $2.7 billion in total revenue, up 26% from the previous year.

It also posted net income of $499 million for the year, up from a $301 million net loss in 2023. GAAP earnings jumped to 39 cents per share last year, up from a net loss of 36 cents per share in 2023.

“SoFi set new records in revenue, profit, members, and products in 2024, and we look forward to continuing to build momentum on this in 2025,” Noto said.

Among the fourth quarter highlights, SoFi added 785,000 new members, or customers, and 1.1 million new products, which are services that members use – both records for a quarter. Total members are now 10.1 million, up 34% from last year, while total products are 14.7 million, up 32% from the previous year.

It was also a huge quarter for loans, as total loan originations skyrocketed 66% to $7.2 billion – a record. Personal loans jumped 63% to $5.2 billion, while student loans rose 71% to $1.3 billion. Home loans spiked 87% to $577 million.

Further, its technology platform, Galileo, which offers banking-as-a-service, saw revenue increase 6% to $103 million. Also, the service was selected by the US Department of the Treasury as the processing partner for Direct Express, a prepaid debit card program.

Disappointing outlook

SoFi came into 2025 with a lot of momentum, but not as much as analysts thought.

In the first quarter, SoFi management guided for $725 million to $745 million of adjusted net revenue, $175 million to $185 million of adjusted EBITDA, and $30 million to $40 million of GAAP net income or 3 cents per share.

While the revenue numbers were above consensus estimates, the projected earnings of 3 cents per share were below estimates of 6 cents per share.

For the full year, SoFi estimates adjusted net revenue of $3.2 billion to $3.275 billion, which would be a 23% to 26% year-over-year increase. That would be ahead of analysts’ estimates of $3.0 billion. However, projected net income of $285 million to $305 million in fiscal 2025, or 25 cents to 27 cents per share, fell short of estimates of 28 cents.

Is SoFi stock a buy?

The market reaction seems a bit overblown, considering SoFi based its outlook on pretty conservative macroeconomic estimates. It may be why the stock was bouncing back a bit as the morning wore on, down just 7% as of 11:00 a.m. ET.

It was also a down day from the market, as NVIDIA got hammered, which may have also sparked the initial SoFi selloff.

One legit concern is SoFiʻs valuation. It is running very hot after a strong year, with a high forward P/E of 61. Analysts may believe the somewhat muted outlook may not be enough to warrant the high valuation.

SoFi is a good, growing company, but investors may want to wait for things to settle a bit.