After three years of high growth, the stock of SoFi Technologies (SOFI +2.26%) has dropped like a rock this year. It’s off 47% from its November high, and a recent short-seller’s report hasn’t helped the situation.
A low price could create an opportunity, or it could also be a value trap. Here’s why I think SoFi could bounce back, with responses to the misconceptions that its bears have about it.
A SoFi logo in an office. Image source: SoFi.
1. “SoFi is just another online bank.”
There’s some pessimism about what makes SoFi stand out from a crowded marketplace of online banks. Nearly every bank, big or small, has an online presence today, and SoFi needs a moat to be investable.
To differentiate itself, the fintech touts its “one-stop shop” approach to online financial management as its advantage. It aims to offer bank accounts, loans, investing tools, and more, growing with its young target clientele as they grow and have greater financial needs.
Another way it stands out is in some of the more innovative products it offers, like access to private equity funds that include the highly anticipated SpaceX debut and some initial public offerings.
Personally, I see this manifesting itself in a different way. Clearly, something is resonating with SoFi’s target population. It added 1 million new members in the 2025 fourth quarter, another record.
Today’s Change
(2.26%) $0.42
Current Price
$19.25
Key Data Points
Market Cap
$24B
Day’s Range
$19.10 – $19.44
52wk Range
$11.64 – $32.73
Volume
332K
Avg Vol
65M
Gross Margin
61.06%
The company has geared its platform to reach a young generation of banking customers who are just starting out and need easy-to-use services that are all online. The fintech speaks their language, and its digital services have a clear interface and message that make it less intimidating than many of the older and bigger banks.
It was created from the bottom up as an all-digital platform to service this group. It may not offer services significantly different from those of other banks, but it’s trying to be better. It’s doing what’s necessary to attract its target audience, and it’s those differences that matter. It’s like that in virtually any business.
2. “SoFi is engaging in bad accounting practices.”
This is a recent bear argument from short-selling firm Muddy Waters Research, which has a practice of digging up claims against public companies and writing short reports. Its March 17 report makes various assertions about SoFi’s accounting practices, which management has vigorously denied.
At least one Wall Street analyst, Dan Dolev of Mizuho, has voiced doubts about the report’s points, and although the stock fell after the report was released, it’s been rising again.
Of course, every investor should consider all views seriously to make an informed decision. However, what we do know about the company is that it’s popular, growing quickly with a 37% year-over-year increase in adjusted net revenue in the 2025 fourth quarter, and that it has enormous opportunities ahead.
3. “SoFi stock is too expensive.”
Stock valuation is often subjective, and there are several ways to evaluate it.
According to the classic P/E ratio, which is 51, and price-to-book ratio, which is 2.3, SoFi stock is expensive. However, the forward P/E of 24 looks very reasonable for a growth stock. The disparity between the backward-looking and forward-looking P/E ratios implies fast growth. The price-to-book ratio is helpful when evaluating bank stocks, and price-to-book of 1 is fairly priced. However, SoFi is growing its book value at a fast rate, which is why it can carry a higher valuation.
I can’t tell you how fast SoFi stock will bounce back, and it may take time after the recent negativity relating to the short-seller’s report. However, it releases earnings at the end of the month, and if the market likes them, the stock could soar. It’s not for the most risk-averse investors, but in the long term, SoFi is poised to keep growing and creating shareholder value.
