Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.
SoFi Technologies SOFI reported strong first-quarter earnings, as the company benefited from strong demand for its loans from both borrowers and investors. Adjusted net revenue increased 32.7% year over year to USD 770.7 million, while adjusted EPS rose to USD 0.06 from USD 0.02 last year.
Why it matters: SoFi’s loan platform business was a major source of growth, with revenue increasing to USD 96.1 million from USD 10.7 million last year. Our concerns that this business would be a growth headwind in 2025 once the initial USD 2 billion deal with Fortress ended have not been borne out.
Demand for loans through SoFi’s sales channel has been stronger than expected, with the firm signing a total of USD 8 billion in new commitments in 2025.This demand has allowed SoFi to take full advantage of its origination potential, with total loan origination increasing 66% year over year to USD 7.2 billion, inclusive of the USD 1.6 billion originated through the loan platform segment.
The bottom line: We maintain our USD 14 per share fair value estimate for no-moat SoFi. We see the shares as fairly valued at current prices. We also note that the firm is exposed to macroeconomic uncertainty. Our Uncertainty Rating is Very High.
SoFi’s loan origination capabilities are larger than its balance sheet can support. However, the firm is still able to monetize the strength of its sales channel by either selling loans it makes in the secondary market or signing third-party origination deals in its loan platform business.If economic conditions deteriorate due to tariff-related uncertainty, we expect demand for SoFi’s loans to drop, reducing both volume and pricing in this part of its business.
Key stats: Thanks to the strong quarter, SoFi increased its 2025 GAAP EPS guidance. The firm now expects to earn USD 0.27-USD 0.28 per share, up from its initial guidance of USD 0.25-USD 0.27.
This is still a bit below our own projection for USD 0.32 in 2025, but we note that SoFi has a history of issuing conservative guidance.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
