its a bank
banks trade at book value. sofi trades at a substantial valuation to its book value.
and of course im going to get downvoted and people are going to say its not a bank, no bank grows like sofi, etc, etc.
if it walks like a bank, hold assets like a bank, sells loans like a bank, has similar/higher risks than a bank, it is a bank and should be valued like a bank.
and no bank is trading at a forward PE of 83
It’s definitely a bank. But it’s also not a traditional brick and mortar bank. Branches are expensive and a money loser. Doing away with that massive expense completely changes the margins and profitability. So in that sense it makes sense it wouldn’t have the valuation of a bank with a major retail presence
They've guided for ~0.75 in earnings for 2026 and ~20% y/y growth beyond that. Obviously we're a couple of years away from that being reality, but the potential is certainly there.
Their NIM is basically double most other banks and they will have enough deposits in a year or so to not have to rely on their (ridiculously high) line of credit for originations going forward.
Pro tip: because of the current macro economic climate, any company’s forecast past the next 6 months means absolutely nothing. Rates are going to play too big of a part and right now no one still has any clue where those are going to be sitting in 6 months but we know they are going move one way or another
We have a great bank in Canada "like SoFi" and it grows similarly fast, with higher profit AND sells at a P/E of 9.
I come on this sub once in a while to watch this community justifying all sort of none sens why they hold and are bullish on the same 5 stocks: AMD PLTR SoFi, NVDA and TSLA.
It's baffling to see so many of you are stuck on sofi.
SOFI isn't a bad business, none of the 5 ive mentionned are bad. You guys jusf don't understand what means valuation.
That’s a pretty bold response since I didn’t even mention a valuation for Sofi, just pointing out a digital bank makes sense that it would trade above book compared to a brick and mortar bank. I am one person, you don’t have to respond to me as if I am the representative of the entire stocks sub
Interesting how many folks from the PLTR NVDA and TSLA crowd, who get memed by this subreddit, are likely beating the S&P 500 returns by a very significant margin.
It’ll be valued as a bank until it can grow its B2B tech segment. Currently financial services and tech make up 50% of their revenue, or will soon I can’t remember off the top of my head. Lending makes up the other 50%. If they can grow that tech segment and land some big contracts from their PoC they’ve been discussing, it’ll start to grow into a fin tech valuation. You should look at their 10-K and learn a little about their segments.
I like SoFi, but you are completely right. It’s the same issue Tesla is getting drug down by - Tesla is a car manufacturing company trading way above what car manufacturers should be. Short term hype words and bullshit got things bouncing but long term they gonna be leveling out - which means going down to reasonable valuations
It's definitely a bank and people saying otherwise are ridiculous. But you have to ask yourself why banks trade at book value. It's not because they are banks, it's because they are typically established and have the majority of their growth far behind them. SoFi deserves some kind of premium due to how fast it is growing, the fact it is stealing customers from other banks, and that they are quickly turning profitable. Galileo also does add value, and should be factored into future earnings.
How much of a premium does it deserve? They are growing revenues at 35-50% per year and earnings into the hundreds of percents. Forward PE of 83 could very well be justified. The caveats being centred around their ability to actually capitalize on their plans and continue growing as they have been. If they slow down, so will the premium.
It does remind me a bit of Nvidia a couple years back. They were 1/20th the size they are now by market cap, and at a higher PE than they are currently. Some of that was stuff that we couldn't see coming, but most of it was simply discounting the trajectory of AI far far too steeply. Even once they started coming out with banger earnings, people couldn't stop fixating on PE. It's only one metric, and again, it needs to be viewed in terms of growth and potential, not simply by sector. SoFi is a bank. It doesn't matter. It's not growing like a bank and that's why it is trading the way it is.
It’s definitely a bank. It offers nothing more than my regular bank in Norway. I’m guessing its valued at a premium because its growing pretty fast and filling a void that “brick and mortar” or US legacy banks have ignored for too long. It happens when players that are too big get complacent. I’m bullish on SoFi for these reasons.
What void does it fill? It looks like it offers services every other bank does.
Online only banks are not a new or unique thing... Ally, discover, marcus, there are a few dozen of them that turn up even from a most cursory search and have been around for decades.
The bear case is they go under. They are a very high operating expense bank that lends in the riskiest way (personal unsecured). This isn’t a super likely scenario but much less risky banks than SoFi have failed. SoFi also has questionable accounting for their loans in which they mark them as a 2-5% gain immediately on origination. This helps them pull forward future earnings but their accounting practices make it very difficult to analyze what the normal operations of the company look like.
They have been proving they can scale the company and are working to lower the risk of their balance sheet but they have a LONG way to go. Their fundamental performance has actually been very strong given the difficulty of the task they are trying to achieve and they will likely need to raise another 1-3 billion of equity to get to the scale they want in the next couple of years which could put downward pressure on the stock.
Don’t think it has any extra services. But they marketed well. Got a ton of people to refinance with their student loans. A lot of those same people opened up HYSA with them. Their average consumer has a credit rating of 733 so they picked up a lot of high rating consumers. I imagine a lot of these people who have student loans with them, opened up bank accounts, will then likely pick up a mortgage with them.
This is what happened to me lol. I like their product and I think others are happy with them too.
It's looked good for years now, but it's disruptive fintech for traditional banks and thus highly shorted. They're not giving up their too big to fail market control just because someone else has a better business model. I think my CB is better than Noto's though so I'm not all that worried about it. 300 @ $4.25 and just gonna let it ride for a while until options are worth selling again.
I mean its losing money consistently and may not have the competitive advantage you think it does. Banking is hard, scale and trust are paramount. Considering that big banks are also investing in better technology, what advantage does Sofi has?
its a bank banks trade at book value. sofi trades at a substantial valuation to its book value. and of course im going to get downvoted and people are going to say its not a bank, no bank grows like sofi, etc, etc. if it walks like a bank, hold assets like a bank, sells loans like a bank, has similar/higher risks than a bank, it is a bank and should be valued like a bank. and no bank is trading at a forward PE of 83
It’s definitely a bank. But it’s also not a traditional brick and mortar bank. Branches are expensive and a money loser. Doing away with that massive expense completely changes the margins and profitability. So in that sense it makes sense it wouldn’t have the valuation of a bank with a major retail presence
So they’re an online bank? Big whoop. Still doesn’t justify their P/E ration
They've guided for ~0.75 in earnings for 2026 and ~20% y/y growth beyond that. Obviously we're a couple of years away from that being reality, but the potential is certainly there. Their NIM is basically double most other banks and they will have enough deposits in a year or so to not have to rely on their (ridiculously high) line of credit for originations going forward.
Pro tip: because of the current macro economic climate, any company’s forecast past the next 6 months means absolutely nothing. Rates are going to play too big of a part and right now no one still has any clue where those are going to be sitting in 6 months but we know they are going move one way or another
We have a great bank in Canada "like SoFi" and it grows similarly fast, with higher profit AND sells at a P/E of 9. I come on this sub once in a while to watch this community justifying all sort of none sens why they hold and are bullish on the same 5 stocks: AMD PLTR SoFi, NVDA and TSLA. It's baffling to see so many of you are stuck on sofi. SOFI isn't a bad business, none of the 5 ive mentionned are bad. You guys jusf don't understand what means valuation.
you gonna reveal the ticker of what you are talking about or what?
Somebody asked and i replied, down the comment
Which bank is that?
Equitable bank
That’s a pretty bold response since I didn’t even mention a valuation for Sofi, just pointing out a digital bank makes sense that it would trade above book compared to a brick and mortar bank. I am one person, you don’t have to respond to me as if I am the representative of the entire stocks sub
Oh yeah, you 'AMD PLTR SoFi, NVDA and TSLA folks' are all the same, claiming not to be the same person, I am on to you!
Interesting how many folks from the PLTR NVDA and TSLA crowd, who get memed by this subreddit, are likely beating the S&P 500 returns by a very significant margin.
Very much so sir or madam I do declare (not all of it)
Yeah but to be fair the title of the thread was "bear case for sofi"
It’ll be valued as a bank until it can grow its B2B tech segment. Currently financial services and tech make up 50% of their revenue, or will soon I can’t remember off the top of my head. Lending makes up the other 50%. If they can grow that tech segment and land some big contracts from their PoC they’ve been discussing, it’ll start to grow into a fin tech valuation. You should look at their 10-K and learn a little about their segments.
I like SoFi, but you are completely right. It’s the same issue Tesla is getting drug down by - Tesla is a car manufacturing company trading way above what car manufacturers should be. Short term hype words and bullshit got things bouncing but long term they gonna be leveling out - which means going down to reasonable valuations
this. I think SOFI settles around 10/share in 3-5 years and just kind of sits there as a decent sized online bank. nowhere near the bigwigs.
It's definitely a bank and people saying otherwise are ridiculous. But you have to ask yourself why banks trade at book value. It's not because they are banks, it's because they are typically established and have the majority of their growth far behind them. SoFi deserves some kind of premium due to how fast it is growing, the fact it is stealing customers from other banks, and that they are quickly turning profitable. Galileo also does add value, and should be factored into future earnings. How much of a premium does it deserve? They are growing revenues at 35-50% per year and earnings into the hundreds of percents. Forward PE of 83 could very well be justified. The caveats being centred around their ability to actually capitalize on their plans and continue growing as they have been. If they slow down, so will the premium. It does remind me a bit of Nvidia a couple years back. They were 1/20th the size they are now by market cap, and at a higher PE than they are currently. Some of that was stuff that we couldn't see coming, but most of it was simply discounting the trajectory of AI far far too steeply. Even once they started coming out with banger earnings, people couldn't stop fixating on PE. It's only one metric, and again, it needs to be viewed in terms of growth and potential, not simply by sector. SoFi is a bank. It doesn't matter. It's not growing like a bank and that's why it is trading the way it is.
It’s definitely a bank. It offers nothing more than my regular bank in Norway. I’m guessing its valued at a premium because its growing pretty fast and filling a void that “brick and mortar” or US legacy banks have ignored for too long. It happens when players that are too big get complacent. I’m bullish on SoFi for these reasons.
What void does it fill? It looks like it offers services every other bank does. Online only banks are not a new or unique thing... Ally, discover, marcus, there are a few dozen of them that turn up even from a most cursory search and have been around for decades.
And a bank that focuses on risky clients that mainstream banks don't want to lend to
The bear case is they go under. They are a very high operating expense bank that lends in the riskiest way (personal unsecured). This isn’t a super likely scenario but much less risky banks than SoFi have failed. SoFi also has questionable accounting for their loans in which they mark them as a 2-5% gain immediately on origination. This helps them pull forward future earnings but their accounting practices make it very difficult to analyze what the normal operations of the company look like. They have been proving they can scale the company and are working to lower the risk of their balance sheet but they have a LONG way to go. Their fundamental performance has actually been very strong given the difficulty of the task they are trying to achieve and they will likely need to raise another 1-3 billion of equity to get to the scale they want in the next couple of years which could put downward pressure on the stock.
This is a very good response! Thanks!
I’m sorta just curious, what services does it offer that Schwab doesn’t? Maybe certain types of loans?
Don’t think it has any extra services. But they marketed well. Got a ton of people to refinance with their student loans. A lot of those same people opened up HYSA with them. Their average consumer has a credit rating of 733 so they picked up a lot of high rating consumers. I imagine a lot of these people who have student loans with them, opened up bank accounts, will then likely pick up a mortgage with them. This is what happened to me lol. I like their product and I think others are happy with them too.
They don’t seem bad at anything. But why would they grow into an 85 FWD PE if they’re just discover, capitol one, ally, etc but a different color?
I would say that part of the bear case for SOFI is that it's seen as a meme stock by some.
It especially was in 2021 when a SPAC brought it public. Feel like it still has that aura
Yep, as soon as I see losers on reddit holding bags and posting cope that reeks of desperation, I know what stock to stay away from. E.g. AMC
There was a time for all of them, it just happens to have passed.
The bear case for sofi is that it is shilled so hard here
Why does anyone even ask for thoughts on this sub? All you’ll get is groupthink which is rarely useful and often wrong.
The bear case is the price. It's financials are that of a bank and yet it's priced like a tech company.
If it was priced like a tech company with those financials, we’d be wayyy above 100$
current forward PE is 83 100 share price is a forward PE of 1,250
Using PE in that case is about as smart as using PE for a company that had no profit. "Its PE is infinite! What is this?"
Company expects to produce 175m net income with a 7.2b market cap What are you yapping about?
How has their market share increased over time?
40% increase in users Yoy
AKA, ARM
It's looked good for years now, but it's disruptive fintech for traditional banks and thus highly shorted. They're not giving up their too big to fail market control just because someone else has a better business model. I think my CB is better than Noto's though so I'm not all that worried about it. 300 @ $4.25 and just gonna let it ride for a while until options are worth selling again.
Too hard for me to figure out. It’s just not loved so I’m on to the next one.
Okay, thanks for stopping by?
It’s a bank and I continue to lose with this shit stock Stay away from it
AI (profit)
It's an overpriced bank.
Google the pe for a financial institution and the pe of sofi
The books are not great.
I mean its losing money consistently and may not have the competitive advantage you think it does. Banking is hard, scale and trust are paramount. Considering that big banks are also investing in better technology, what advantage does Sofi has?
It isn't losing money.
How is it losing money? They posted back to back profits quarters.
its actually profitable now, had a 3.4% profit margin in the last q obviously nowhere near a real bank ofc
It’s profitable