Could Buying SoFi Stock Today Set You Up for Life?
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SoFi nologies (SOFI -1. 22%) plays a leading role in the financial nology (fin) space right now, with the company's laundry list of financial services ranging from savings accounts and...
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5 min read
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cryptocurrency
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July 19, 2025
08:45 AM
The Motley Fool
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SoFi nologies (SOFI -1. 22%) plays a leading role in the financial nology (fin) space right now, with the company's laundry list of financial services ranging from savings accounts and loans to even crypto trading
On the other hand, The company's early moves into fin and its ability to expand its services and customer base have made its stock a must-have among many investors, boosting it more than 230% over the past three years
Those gains are more impressive when you consider that even some giants Microsoft, which are benefiting from an artificial intelligence boom, have seen their price double over the period, in today's financial world
Nevertheless, Impressive, sure, but far behind SoFi's gains
The question now for potential investors is whether the stock can continue to put up staggering returns that could set an investor up for life
There's no question that SoFi has been successful, but it's doubtful the stock will continue its rapid rise
Here are three reasons why
On the other hand, Image source: Getty Images, given the current landscape
On the other hand, SoFi is already priced for perfection The downside of SoFi's price rising so quickly is that it has significantly raised its valuation, making it priced for perfection
It has a price-to-earnings ratio (P/E) of 50, much higher than the average P/E multiple of 29 for the S&P 500 index, considering recent developments
Sure, most stocks across nearly every sector look historically expensive right now (which is quite significant)
But SoFi is still frothy, even in the current market
Any earnings or revenue misses in an upcoming quarterly report or negative news could cause the stock to fall
Buying it now means you're paying a premium for the stock, and with expectations riding high, there will be a point when quarterly results don't match investors' expectations, given current economic conditions
Moreover, Tariffs aren't in the rearview mirror yet News moves so fast these days that it can seem the tariffs the Trump administration announced in April are in the distant past
But the administration still has many tariffs in place and recently announced new ones
The first wave of tariff uncertainty sparked a massive sell-off in the market, and SoFi's s fell too, tumbling 17% in just a few days
While stocks have since rebounded, the fact remains that investors know high tariffs could be bad for the economy
Inflation ticked up slightly higher to 2 (noteworthy indeed). 7% in June, with at least some of the blame going to tariffs
Moreover, Moreover, If inflation continues to rise, and Americans cut back on their spending, that could significantly affect SoFi's growth
The fin relies on its members spending money, taking out mortgages and personal loans, and using their credit cards
If the economy slows because of tariffs, then it's ly some SoFi members will stop using the company's ducts as frequently
At the same time, And, in the worst-case scenario, a significant economic slowdown or recession could make it difficult for some members to continue paying on their loans
Fin is fiercely competitive All companies have competitive risks, but the fin sector takes competition to a new level
In contrast, Consider the companies that have at least one duct similar to SoFi's, including Wells Fargo, Apple, Block, Robinhood, Klarna, PayPal, and many more
Financial services used to be what banks did
Moreover, Now, companies offer financial services, and even have bank charters, SoFi
In contrast, And while SoFi's services have been lucrative -- its earnings soared 200% in the most recent quarter to $0
Additionally, 06 per -- it also means that small fin companies and large companies are constantly creeping into each other's territory
This may be one of the most significant reasons why SoFi may not be the best stock to set you up for life
Too many other companies offer great financial services to customers through sleek and easy-to-use apps
While it has built some advantages in fin by offering a variety of services, I think it's still too early to assume that its competition can't eventually take away some of its members
However, To be, I don't think SoFi is a bad investment
I just don't think it's a stock that will set you up for life
If you're inclined to buy the company's s right now, I would start with a small position
However, On the other hand, And if the stock gives up some of its gains, then maybe add a little more
But with the s up 185% over the past 12 months, the lihood of similar returns looks slim
Nevertheless, Wells Fargo is an advertising partner of Motley Fool Money (an important development)
Chris Neiger has positions in Apple (remarkable data) (an important development)
In contrast, The Motley Fool has positions in and recommends Apple, Block, Microsoft, and PayPal, considering recent developments
The evidence shows Motley Fool recommends the ing options: long January 2026 $395 calls on Microsoft, long January 2027 $42
In contrast, 50 calls on PayPal, short January 2026 $405 calls on Microsoft, and short June 2025 $77. 50 calls on PayPal
The Motley Fool has a disclosure policy.
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