KBW Analyst Maintains Sell Rating on SoFi with $14 Price Target

KBW analyst Tim Switzer maintained a Sell rating on SoFi with a $14.00 price target, citing a quarterly revenue of $1.04 billion and a net profit of $71.12 million. SoFi also received a Sell from Morgan Stanley's Jeffrey Adelson, but a Hold from Truist Financial. The company's corporate insider activity shows a negative sentiment, with an increase in insiders selling their shares.

SoFi Technologies (NASDAQ:SOFI) reported robust second-quarter 2025 results, with adjusted net revenue surging 44% to $858 million. The company's shares jumped 6.47% in premarket trading to $22.38 following the announcement, which highlighted accelerating growth across key metrics and raised full-year guidance.

The fintech company, valued at over $14 billion, reported record adjusted EBITDA of $249 million and GAAP net income of $97 million. Adjusted EPS reached $0.08, marking the company's seventh consecutive quarter of profitability. Member acquisition remained strong, with 850,000 new members added during the quarter, bringing the total to 11.75 million. Product adoption was equally robust, with 1.3 million new products added, reaching 17.14 million total products [1].

Fee-based revenue, which has become an increasingly important component of SoFi's business model, grew 72% year-over-year to $378 million, now representing 44% of adjusted net revenue. The company's strategic diversification beyond interest-based lending revenue is evident in this shift [1].

SoFi's Financial Services segment nearly doubled its contribution margin year-over-year while delivering 2x net revenue growth. The segment generated $194 million in net revenue with a 49% contribution margin, producing $188 million in contribution profit. The Lending segment continued to deliver strong results with adjusted net revenue of $373 million, up 32% year-over-year, and maintained a healthy 55% contribution margin generating $245 million in contribution profit. Loan originations reached a record $8.8 billion in the quarter. The Technology Platform segment, which includes Galileo and Technisys, generated $110 million in revenue (15% year-over-year growth) with a 30% contribution margin [1].

SoFi's profitability metrics showed significant improvement, with adjusted EPS reaching $0.08 in Q2 2025, tangible book value growing to $5.26 billion, and return on tangible common equity (ROTCE) improving to 7.7%. Credit quality remained strong despite the rapid growth in lending, with personal loan borrowers having a weighted average income of $161,000 and a weighted average FICO score of 743. Net charge-offs declined 48 basis points to 2.83%, while 90-day delinquencies for personal loans decreased 4 basis points sequentially to 42 basis points [1].

SoFi's strategic initiatives, such as the expansion of its Loan Platform Business (LPB) and strengthening its deposit base, have contributed to its growth. The LPB allows the company to originate loans for third parties, now running at an annualized pace of $9.5 billion in originations and over $500 million in high-margin, fee-based revenue. The company's deposit base now funds approximately 88% of its operations, reducing funding expenses by an estimated $552 million per year on an annualized basis while maintaining a strong net interest margin of 5.86% [1].

SoFi raised its full-year 2025 guidance, expecting adjusted net revenue of approximately $3,375 million (30% growth), adjusted EBITDA of approximately $960 million (28% margin), net income of approximately $370 million (11% margin), and diluted EPS of approximately $0.31. The company also expects to add at least 3 million new members in 2025, representing approximately 30% growth from 2024 levels. SoFi's capital position remains strong with a CET1 risk-based capital ratio of 14.3%, well above the 7.0% regulatory minimum [1].

Analysts' reactions to SoFi's earnings report were mixed. KBW analyst Tim Switzer maintained a Sell rating on SoFi with a $14.00 price target, citing a quarterly revenue of $1.04 billion and a net profit of $71.12 million. SoFi also received a Sell from Morgan Stanley's Jeffrey Adelson, but a Hold from Truist Financial. The company's corporate insider activity shows a negative sentiment, with an increase in insiders selling their shares [2].

SoFi Technologies' impressive Q2 2025 results and raised guidance suggest that the company's diversification strategy is paying off. The company appears well-positioned to continue its transformation from a lending-focused business to a comprehensive digital financial services platform. However, the mixed analyst sentiment and insider selling activity indicate potential risks to consider.

References:

[1] https://www.investing.com/news/company-news/sofi-q2-2025-slides-record-revenue-growth-accelerates-to-44-as-profits-surge-93CH-4157081
[2] https://www.investors.com/news/technology/sofi-stock-sofi-earnings-q22025/?mod=newsviewer_click&refcode=aflMarketWatch&src=A00619