SoFi Technologies’ (SOFI) fourth-quarter earnings are approaching. The California-based personal finance innovator is scheduled to disclose its numbers on Monday, January 27, with analysts keenly anticipating a bounceback. According to forward estimates, the company is set to post strong Q4 performance figures after lagging behind the broader market for most of 2024. The Q3 bounce-back is set to continue. However, I’m holding a cautiously bullish stance on the company ahead of earnings news in case most of its recent gains have already been priced in.
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In this article, I’ll summarize SoFi’s journey over the past year and what investors can expect in their Q4 news and the rest of 2025.
Recapping SoFi’s Performance in 2024
Before diving into the bullish thesis for SoFi, let’s look at how the stock has been tracking over the past year. SoFi shares remained flat throughout 2024 until October, when, after publishing its Q3 earnings results, a massive rally drove the stock higher. The net result is that the stock has posted a circa 124% return over the past twelve months.
The reason for this trajectory starts with the most crucial point of SoFi’s thesis for 2024: the company’s lending business. At the end of Q1 2024, SoFi informed the market that its lending business would decline by 5% from 2023 levels. However, as the year progressed, the management team, led by CEO Anthony Noto, announced a turnaround with SoFi updating its annual guidance, pointing out that lending revenues would match or outperform 2023 levels.
At the time, SoFi declared that its financial services and tech platform grew by a combined 64% year-on-year, with its CEO declaring it “a testament of our continued execution and deliberate shift towards capital-light, higher ROE, fee-based revenue streams.”
It’s worth noting that lending is not necessarily a question of demand but rather how much the company is willing to lend. For this reason, the direction of monetary policy is highly influential on the projections of a lending company like SoFi. Due to a more hawkish Fed in 2023 and 2024, with interest rates ballooning since 2022 from 0.25% to a peak of 5.5% in July 2023 and remaining at the same level in September 2024, SoFi’s performance was severely impacted. The fintech lender shed almost 80% of its market value between the end of 2021 and mid-2023.
Clarifying Expectations Ahead of SoFi’s Q4 Earnings Results
With Q4 earning results now on the horizon, I am quietly confident that lending revenue will increase year-over-year, considering management’s more conservative approach. This is the first reason I’m bullish on the stock ahead of earnings.
Moreover, economic activity didn’t slow down in the last three months of 2024. In fact, it accelerated. Theoretically, more bountiful economic activity is good news for SoFi. However, the SoFi year-end rally stopped in December, with the Fed cutting interest rates more gently this time, suggesting a more hawkish stance for 2025.
Looking more specifically at SoFi’s Q4, to surpass analysts’ estimates, the fintech pioneer needs to report EPS above 3 cents and revenues above $674.8 million—implying a year-over-year growth rate of 14.2%. While topping estimates will be key to a bullish reaction, I believe the big talking point on earnings day will likely be revenue stream diversification.
In Q3, SoFi’s tech and financial services accounted for 42% of its consolidated revenues. At the beginning of 2024, the management team said it expects the company’s revenues to reach 50% from its tech platform and financial services, with the remaining 50% coming from lending.
So, as long as the company manages to hit that target or even go beyond it (meaning its operations have performed as expected), I estimate that this could be enough for SoFi shares to trade higher following SoFi’s Q4 earnings.
High Short Interest Pressure and Volatility Expected
Although I’m bullish on SoFi, it should be noted that as the stock has a high beta of 2.73 (i.e., nearly 3x more volatile than the S&P 500), investing in SoFI necessitates a relatively high-risk, high-reward approach. Arguably, trading at a 139x forward earnings multiple seems extreme. SoFi’s price action over the last three months may suggest that more optimistic forecasts are likely already priced into the stock.
Such seemingly stretched valuations are also explained by the bold long-term guidance from SoFi’s management team, like an ROTCE (return on tangible common equity) target of 13-15% for 2026, compared to the current 5.6%. This is just one of the reasons KBW analyst Tim Switzer has an underperform rating on SoFi.
However, too much bearishness can backfire on the bears. Recent data shows that ~12.5% of the company’s float is shorted, a sizable chunk. If Q4 results surprise with better-than-expected numbers, I wouldn’t be surprised to see shorts getting squeezed.
Moreover, looking at the options chains ahead of earnings day, the expected price swing is a staggering 14.8%. This percentage is based on the at-the-money straddle (which involves buying both a call and a put option) for options expiring on Jan. 31, with a $16.5 strike price.
Is SoFi a Good Stock to Buy?
As a result of the challenges, SOFI stock isn’t getting much love from Wall Street at the moment. Based on 15 analysts, the consensus is that SOFI has a hold rating comprising six bulls and four bears, with five analysts sitting on the fence. Currently, SoFi stock carries an average price target of $13.19, which implies a downside potential of 20.5%, based on the latest price of around $16.5 per share.
Tentatively Confident Ahead of the Crossroads
Despite the Wall Street doom and gloom, I’m cautiously bullish on SoFi stock heading into Q4 earnings. The stock has been boosted by a more favorable macro scenario, likely surpassing conservative lending revenue guidance. It’s also gaining ground and filling spare capacity across the fintech landscape, ultimately boosting bullish sentiment that further justifies the company’s solid valuation.
That said, since SoFi remains a relatively high-risk investment, investors should beware and diversify accordingly. With any high-risk-high-reward investment, caution is advised — especially when the option chains are pricing in greater chances of extreme volatility in the coming days and weeks.
For SoFi bulls, volatility is a superb opportunity to establish long-term positions at lower levels. Meanwhile, it may be a good idea for SoFi bears to trim their positions prior to the volatility likely to ensue later this month.
