Is SoFi Stock a Buy Now? Alternative Data Provide Key Insights
March 8, 12:43 pm
SoFi Technologies (SOFI) has had a turbulent few months, with its stock down more than 20% in the last quarter. This decline comes despite strong Q4 2024 earnings, largely due to investor concerns over a challenging 2025 outlook and proposed tariffs that could weigh on consumer spending and financial sector performance. However, alternative data insights suggest a more optimistic outlook for the company, indicating strong user engagement and growth trends that could support a rebound in the stock price.
Strong Financial Performance Despite Market Headwinds
SoFi, a fully digital bank, reported impressive growth at the end of 2024. The company reached 10.1 million members, a 34% year-over-year increase, and expanded its product offerings by 32% to 14.7 million. Non-lending services have surged by 84%, showing that SoFi is successfully diversifying beyond its core lending business.
Financially, the company reported GAAP net revenue of $734.1 million in Q4 2024, marking a 19% year-over-year increase, while full-year revenue climbed 26% to $2.7 billion. Fee-based revenue also saw significant growth, up 63% in Q4 and 74% for the full year.
Yet, despite these strong figures, Wall Street analysts remain cautious. SoFi currently holds a "Hold" rating among analysts, with an average price target of $14.31, representing a modest 6.55% potential upside. The primary concerns stem from macroeconomic uncertainties, including proposed tariffs that could slow consumer spending and impact loan demand.
Tariffs and Macroeconomic Risks
The new tariffs, which could be implemented under the new US administration, pose a risk to the broader financial sector. Retailers like Target and Best Buy have already warned that tariffs could dampen consumer confidence and spending. If economic activity slows, SoFi could experience lower loan demand and potential increases in delinquencies - both of which could weigh on future earnings.
Additionally, heightened economic uncertainty could hurt investment banking activities, such as mergers and IPOs, further limiting SoFi’s growth potential. While the long-term impact of these tariffs remains uncertain, their potential to slow economic activity is something investors must watch closely.
Alternative Data Insights
At AltIndex, we analyze a wide range of alternative data to assess a company's future potential beyond traditional financial metrics. SoFi currently holds an AI Score of 61, signaling a buy rating. Here's why:
Revenue Growth: SoFi’s revenue grew 5.5% in the last quarter, reflecting continued expansion despite recent stock price declines.
Hiring Trends: Increased hiring activity is often a sign of future growth. Our analysis of job postings on LinkedIn and Glassdoor shows that SoFi has been ramping up hiring in the last 12 months.
Web Traffic Surge: More web traffic typically correlates with rising demand for financial products. SoFi’s website hit an all-time high in visitors in January, with traffic up 14% year over year.
Mobile App Growth: Downloads of SoFi’s mobile apps have also risen sharply in recent months, signaling continued user engagement and platform adoption.
Employee Sentiment Improving: While employee sentiment remains neutral, it has improved from 53% positive six months ago to 57% today, suggesting an increasingly optimistic workforce.
Social Media Growth: SoFi’s popularity is increasing across social platforms, with Instagram followers up 20.6% year over year and YouTube subscribers up 167%.
Investor Sentiment Remains Bullish: Despite the stock’s recent decline, SoFi maintains a sentiment score of 92 out of 100 on investment forums, reflecting strong retail investor confidence.
Final Verdict: Is SOFI a buy?
While macroeconomic risks - particularly potential tariffs - pose a challenge for SoFi, alternative data signals indicate strong user engagement, expanding digital presence, and increasing hiring trends, all of which point to continued growth potential. The AltIndex Score of 61 suggests that SoFi’s current price decline may be an overreaction, presenting a potential buying opportunity for long-term investors.
As always, investors should weigh macroeconomic risks alongside alternative data insights to make informed decisions. SoFi’s financials remain strong, and its alternative data metrics suggest that growth is far from slowing. If consumer spending holds up better than expected, SoFi could see a meaningful rebound from its recent dip.
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