Shares of SoFi Technologies (SOFI) took a significant hit despite delivering stronger-than-expected fourth quarter financials. Its stock dipped 10.3% following management’s earnings per share (EPS) guidance, which fell short of expectations.

For the first quarter of 2025, the financial technology company projects EPS of $0.03, with full-year estimates between $0.25 and $0.27. Wall Street analysts, however, had set their sights higher, anticipating $0.06 for the first quarter and $0.30 for the entire year. This guidance miss overshadowed SoFi’s impressive Q4 results.

The market's disappointment was compounded by high expectations following SoFi’s impressive run of beat-and-raise quarters. Further, over the past six months, the company’s shares have surged by a remarkable 111%. Given this momentum, investors were hoping for even more optimistic guidance.

SoFi Is Investing for Growth

The lower-than-expected earnings forecast hints at increased spending to acquire new customers. SoFi’s decision to invest in innovation and brand building may cause short-term earnings volatility, but it positions the company for long-term growth. For instance, the expansion of its customer base and cross-selling products enables SoFi to lay the groundwork for sustained growth.

Existing customers already play an important role in the company’s growth. In 2024, 30% of new product sign-ups came from current SoFi members. Nearly 40% of new members adopted a second product within 30 days of joining. These statistics highlight SoFi’s ability to generate additional revenue from its existing customer base, which is a key driver of growth in the future.

With this background, let’s take a closer look at SoFi stock.

SoFi’s Growth Catalysts

SoFi’s member base now exceeds 10 million, representing a 34% year-over-year increase and tenfold growth over the past five years. The company continues to set records, adding 785,000 new members in Q4 alone.

Product growth has also been stellar. Over 1.1 million new products were added in Q4, bringing total product growth to 14.7 million, a 32% increase from the prior year. Financial services products, in particular, accounted for 89% of this growth, signaling a strategic shift toward capital-light, fee-based revenue streams.

This diversification has already paid off. Total fee-based revenue hit a record $970 million for the year, up 74% from the previous year. The company’s efforts to boost monetization are supporting its growth, with financial services revenue per product increasing 37% from $59 in Q4 2023 to $81 in Q4 2024. This trend will likely sustain in 2025 as its new products mature.

Further, SoFi’s strategy to transform the loan platform business (LPB) provides a solid base for long-term growth. Previously, SoFi either held loans on its balance sheet or sold them to manage risk and capital.

Now, SoFi partners with buyers to originate loans that meet predefined criteria, earning fee income without having to hold the loans on its balance sheet. Importantly, SoFi retains servicing rights, allowing it to continue cross-selling products.

This model enables the company to serve more members without taking on additional risk or capital while further diversifying its revenue streams.

Further, SoFi’s expansion of its deposit base is another solid growth catalyst. Since acquiring a bank license in 2022, SoFi has grown its deposits to $26 billion. It enjoys a favorable 193 basis point spread between the interest it pays on deposits and warehouse lines, translating to approximately $500 million in annual interest expense savings. This deposit-fueled growth strengthens SoFi’s balance sheet and expands its net interest margin, giving it an edge over competitors.

A Compelling Entry Point

SoFi has significant untapped addressable markets and is well-positioned to exceed its medium-term goal of delivering 20% to 25% compounded annual revenue growth through 2026. Management is optimistic about delivering EPS in the range of $0.55 to $0.80 per share by 2026, with the potential for continued 20% to 25% EPS growth beyond that.

With growth catalysts like the LPB and technology platform, along with a focus on revenue diversification and risk reduction, SoFi is well-positioned for long-term growth.

Wall Street analysts currently hold a “Hold” consensus rating on SoFi stock. However, the recent dip provides a compelling entry point for investors with a long-term outlook. SoFi's investments in growth and innovation will enable it to deliver solid growth, driving its share price higher.