To The Moon

$SoFi Technologies Inc.(SOFI)$

During the company’s latest update, management emphasized the strength of a particular business segment—one I believe is not only highly lucrative but strategically vital to SoFi’s future. This segment continues to thrive, even in the face of a complex macroeconomic environment, and the implications for long-term shareholders are enormous.

In this deep dive, I’ll explain:

• What this business segment is,

• Why it’s so profitable and low risk,

• How it strengthens SoFi’s broader ecosystem, and

• Why this could be a major catalyst for SoFi stock going forward.

The Segment That’s Powering SoFi’s Financial Services Growth

Let’s start with the core of the news. SoFi’s CEO highlighted a fast-growing segment within its Financial Services arm: its loan platform business, which originates loans on behalf of third-party institutions.

Now, this isn’t your traditional lending model. In this setup, SoFi does not keep these loans on its own balance sheet. Instead, it performs the work of originating and servicing the loans—acquiring the customer, verifying the application, onboarding them, and managing all ongoing interactions—but the credit risk is transferred to a third party.

In less than a year, SoFi has scaled this business to a $6 billion annualized run rate, with over $380 million in incremental loan originations, all of which generate high-margin, high-return, fee-based revenue.

But perhaps the most compelling detail for investors is this: SoFi continues to see strong demand from third-party lenders who want access to its origination engine—even in the face of macroeconomic uncertainty.

Why That’s Such a Big Deal

To understand the significance of this, let’s zoom out to the broader economic context.

Heading into SoFi’s most recent earnings release in April, I shared some concerns with investors. The U.S. economy was dealing with a new wave of uncertainty following President Donald Trump’s broad-based tariffs, which hit a range of U.S. trading partners. Whether you view those tariffs as ultimately good or bad for the long-term health of the economy, what they immediately introduced was risk and hesitation across the business landscape.

We saw hiring slow. Capex plans paused. Businesses wanted to reassess their models—how much would it cost to absorb these new tariffs? Could they pass price increases onto customers? Would consumers still spend at the same rate?

This environment is not typically favorable for lenders. Economic slowdowns and market volatility naturally make lenders more cautious. When default risks rise, credit spreads widen, and investors retreat from riskier assets. It’s in times like these that originating new loans becomes a far riskier proposition.

That’s why I was watching this segment of SoFi’s business so closely. I was concerned that demand from third-party lenders might dry up. After all, they’re the ones holding the credit risk. Why would they continue aggressively buying loans in such an uncertain macro environment?

But here’s the surprise—not only did demand persist, it grew.

That’s remarkable. It signals two things:

1. Confidence in the quality of SoFi’s origination engine, and

2. Confidence in the risk-return profile of the loans being produced.

Why Investors Should Be Excited: Low Risk, High Return

Let’s talk about the economics of this segment from a shareholder perspective.

When SoFi originates loans for its own balance sheet, it makes money in two primary ways:

• It earns fee-based revenue upfront (application fees, origination fees, etc.),

• And it earns interest income over the life of the loan.

However, there’s a big trade-off: credit risk. If that borrower defaults, SoFi eats the loss. SoFi is essentially placing a bet on each loan it retains.

Now compare that to this third-party loan platform model.

SoFi still earns the fee-based revenue—upfront and recurring—but it avoids the credit risk entirely. That’s the key. This is capital-light, service-based revenue. The margins are high, the returns are strong, and the balance sheet risk is minimal.

That’s the kind of business model investors love: scalable, profitable, and low risk.

SoFi handles the operational aspects:

• Customer acquisition,

• Application and document processing,

• Compliance checks,

• Servicing the loan (collecting payments, making calls, managing accounts).

And for all of that, they get paid—without holding the debt.

This segment is turning into a fee-generating engine that acts like a SaaS-style service in the fintech space. That’s a big shift in how investors might start valuing SoFi.

Cross-Selling and Long-Term Ecosystem Benefits

But the benefits don’t stop there.

Even though the loan is sold to a third party, the customer stays with SoFi. That means the relationship continues. That borrower becomes part of SoFi’s member ecosystem.

And that’s powerful. Why?

Because loans are sticky products. They create long-term, high-frequency relationships. The borrower logs in monthly—or more often—to make payments or check their balance. Every interaction is a chance to upsell another product: checking, savings, investing, insurance, credit cards, and more.

SoFi can now:

• Acquire a customer via the loan,

• Offload the credit risk to a third party,

• Retain the customer relationship, and

• Monetize that relationship further through cross-sells.

This is a flywheel. And the more products a customer uses, the stickier they become. Going from 1 product to 2 is a big leap. But once a customer has 2 or more products, the odds of adding a third, fourth, or even tenth product go up dramatically.

That deepens engagement. It increases customer lifetime value. And it builds durable competitive advantage through network effects and data.

The Strategic Picture: Why It Matters for the Stock

To wrap this all up: SoFi’s third-party loan platform is doing several things at once:

• It’s driving top-line growth through high-margin fees.

• It’s de-risking the business model by removing exposure to borrower defaults.

• It’s expanding the customer base without spending heavily on acquisition.

• And it’s enhancing the value of every customer through long-term cross-selling potential.

In a tough economic backdrop, this kind of segment-level performance is extremely bullish.

It shows that SoFi isn’t just a lender. It’s a platform. A fintech operating system. And as that platform continues to scale, especially with capital-light, fee-heavy revenue, the stock becomes increasingly attractive—particularly for long-term investors looking for durable growth, strong unit economics, and optionality across multiple financial verticals.

This is why I believe the market is underappreciating SoFi’s loan platform business and why I’m keeping a close eye on this segment as a core driver of value going forward.

When SoFi reported its financial results for the first quarter of 2025, I have to admit—I was pleasantly surprised.

Now, let me be clear: I’ve had SoFi rated as a “Buy” all year long. I’ve been publicly bullish on the stock for months. But even with that conviction, I was not expecting these kinds of results for Q1—especially given the intense macroeconomic headwinds we saw earlier this year.

So I want to walk through what management said about the business and explain why these results matter for investors who are trying to understand what’s going on with SoFi stock right now.

Quick shoutout to The Motley Fool for sponsoring this video. Head over to fool.com/parkkev to check out their list of the 10 best stocks to buy right now.

“We’re Off to a Tremendous Start in 2025”

Those were the first words out of SoFi CEO Anthony Noto’s mouth during the company’s earnings call—and frankly, I didn’t expect to hear that.

Why? Because the U.S. economy entered 2025 under serious pressure. The President had just announced broad-based tariffs on major trading partners, which created widespread uncertainty. Business investment slowed. Hiring paused. Economic momentum cooled.

In that kind of environment, I thought SoFi would take a more cautious tone. But instead, the company came out swinging—reporting one of its best quarters in recent memory.

SoFi accelerated its revenue growth to 33% year-over-year, and profits tripled. Let that sink in—profit growth of more than 3x in a quarter when many companies were battening down the hatches.

They also added a record 800,000 new members, driving total membership to 10.9 million, up 34% year-over-year. That’s incredible member growth for a financial services company.

And it reinforces one of the main reasons I’ve been bullish on this stock: SoFi’s value proposition is simply better than what traditional banks are offering.

Why SoFi’s Model is Winning

Let’s talk about why this growth is possible.

Legacy banks in the U.S.—the ones with branches in every community—are falling behind. The customer experience in those brick-and-mortar locations has been deteriorating for years. Understaffed locations, undertrained employees, and long wait times have become the norm.

In my own experience here in Los Angeles—and based on what I hear from others—branch visits are often frustrating. The lines are long, and if you need help beyond a simple transaction, the specialist you need (like a loan or mortgage officer) is usually not there. In many cases, they’ll tell you to call someone instead.

So if the product is going to be delivered over the phone or online anyway… why even maintain these expensive branches?

That’s the problem traditional banks haven’t solved. They’re paying enormous overhead costs for branches that aren’t delivering value to customers. And with rising labor costs, staffing those locations properly would be even more expensive in today’s tight labor market.

So what do they do? They pull back even further. They understaff to save money, which makes the experience worse—creating a downward spiral.

Meanwhile, SoFi was built digital-first. They don’t carry the burden of costly branch networks. They can allocate capital toward developing better digital products, offering competitive rates, and providing a seamless customer experience.

That gives SoFi a structural advantage over legacy banks. And it’s showing up in their member growth and product adoption numbers.

A Platform That’s Actually Diversifying

Now here’s another part of SoFi’s strategy that caught my attention this quarter.

The company reported that it had its highest revenue growth rate in five quarters, with meaningful acceleration across both the Financial Services and Technology Platform segments.

Now, to be clear, SoFi is still primarily viewed as a lender. But the company wants to reshape that narrative—just like how Tesla wants to be seen as an AI company rather than just a car company.

And why does that matter?

Because companies in sectors like fintech and AI tend to get higher valuation multiples than traditional lenders. Car companies, for instance, trade at single-digit forward P/Es. Meanwhile, AI and tech-enabled financial platforms can trade at 20x, 50x, even 100x forward earnings.

Tesla, for example, is doing everything it can to get investors to think of it as an AI and robotics company—even though AI revenue still represents a tiny fraction of their business. The hope is that the market will price the stock accordingly.

SoFi is playing a similar game, but with an important difference: They’re actually earning meaningful revenue from their Financial Services and Tech Platform segments.

In fact, nearly 50% of their revenue now comes from those two non-lending segments. That’s not wishful thinking—that’s real diversification.

The Financial Services and Tech Platform business brought in $47 million in revenue this quarter, growing 66% year-over-year. That’s rapid growth—and it supports SoFi’s case that it’s building a robust, multi-segment platform.

The Lending Surprise

Now let’s talk about lending—which also outperformed expectations.

SoFi’s lending revenue grew 27% year-over-year, which genuinely surprised me. I expected a slowdown given the macro uncertainty and high interest rates. But instead, demand surged.

Why?

Two key drivers:

1. Strong personal loan originations, both for SoFi’s own balance sheet and for third-party institutions.

2. Investor appetite for high-yield consumer credit.

With interest rates still elevated, personal loans are generating yields in the 12–14% range—and that’s extremely attractive to investors seeking returns. SoFi has positioned itself as a high-quality originator in this space. The demand to buy their loans remains strong, and SoFi is benefiting from that demand by originating loans at scale.

What’s even better is that SoFi doesn’t necessarily have to hold these loans on its balance sheet. In many cases, they sell the loans to third-party investors, earn fees, and retain the customer relationship—all while avoiding credit risk.

That’s a capital-light, high-margin model—and it’s a big reason why SoFi’s financial profile is improving.

Conclusion: SoFi’s Execution Speaks Volumes

So to sum it all up:

• SoFi is growing membership at record speed.

• Revenue growth has accelerated to 33%.

• Profits more than tripled.

• Financial Services and Tech Platform segments are surging.

• Lending remains strong despite a tough economic backdrop.

This was a breakout quarter—especially given the headwinds SoFi faced coming into 2025.

SoFi is not just a digital lender anymore. It’s evolving into a diversified fintech platform—and it’s doing so with real products, real customers, and real revenue.

That’s why I remain bullish on SoFi stock. The company is executing well, expanding its margins, and taking share from legacy players that can’t adapt fast enough.

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

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