Summary SoFi Technologies' (SOFI) expanding financial services ecosystem, operating leverage, and cross-selling strategy drive growth, with new crypto initiatives and cautious international expansion underway. Despite management's prudent execution and differentiated offerings, valuation remains high and market sentiment is cautious, limiting near-term upside for SOFI. I reiterate a 'Hold' rating for SOFI, as positives are offset by execution, regulatory risks, and premium valuation in a cooling market environment. SoFi Technologies ( SOFI ) stock has dropped by more than 15% over the last week due to the overall equity market's weakness multiplied by the stock's high beta. Nothing has changed much fundamentally if we speak only about the company. Its latest quarterly earnings were stellar, and the management continues working really hard to expand SOFI's financial services ecosystem to achieve the ultimate goal of building a "one stop shop". However, the environment remains highly uncertain with fears around AI-related valuations together with the U.S. economic growth's slowdown. Due to all these uncertainties, I reiterate a "Hold" rating for SOFI even though the stock outperformed the S&P 500 index since my previous rating downgrade . I continue holding the stock since my average cost is still way below the current share price. However, I am not adding more shares as well. Recent positives SOFI released its latest quarterly earnings on October 28, delivering dual beat against consensus estimates. Quarterly revenue growth was once again impressive with a 37.7% YoY increase in Q3. SoFi's Q3 revenue of around $950 million was by far the highest in the company's history, and they are getting very close to an elite level of $1+ billion in quarterly sales. Surpassing this big psychological milestone is expected to happen in Q1 2026 , which is quite soon. Seeking Alpha I have already said multiple times in my previous SOFI articles that operating leverage has solid potential, and the company proved it once again in Q3 2025. SOFI's EPS grew way faster compared to revenue, from $0.05 to $0.11, i.e. more than doubled on a YoY basis. Doubling the EPS even taking into account that the outstanding share count increased YoY by around 10% clearly demonstrates scalability of SOFI's business model. SOFI's textbook operating leverage is ensured by the management's commitment to expand the ecosystem of services that the company offers. The logic is quite straightforward here. Selling new products to existing customers means that your customer acquisition cost for this incremental sale is almost zero. Of course, there might be still some additional costs like some extra compliance checks. But marketing costs are literally zero in this case, and marketing is expensive in our modern world where people are bombarded by dozens of ads every day and companies need to invest a lot in marketing campaigns to achieve their goals. Moreover, expanding set of offerings also increases switching costs for users because why would someone seek for another financial services app if everything that he or she needs is already available and the level of satisfaction is quite high [4.2 average rating on Trustpilot for 10k+ reviews]? The fact that growth in the number of total products used by clients outpaced growth in members by two percentage points means that their land-and-expand is working. SOFI's Q3 earnings So, from now on, SOFI's playbook is quite simple. They have built a strong brand with high customer satisfaction, and the cross-selling flywheel is working. With this powerful combination, they need to continue expanding their ecosystem of financial services and strategically approach further customer base expansion. By "strategically" I mean that they need to carefully consider every new step to expand the reach customer-wise so as not to break their profitability equilibrium. And I see that they are indeed very prudent in this direction as they started scratching the surface in terms of potential international expansion. For example, SoFi Pay recently started offering international remittance via lightning network with Mexico already live and Europe/Brazil in the pipeline. I think it is a very good move to start checking international potential with no heavy upfront costs and with not pursuing it "all in" by trying to unfold the entire ecosystem in these regions because it will require costly marketing, obtaining local banking licenses etc. This careful approach to international expansion is also reasonable because the company still has plenty to do to fortify its positioning domestically. During the recent KBW Fintech Payments Conference 2025 the management emphasized building out a vertically integrated crypto system. As the first national bank offering crypto trading, SoFi is already differentiated from the competition. But they are not willing to stop there and plan to take diversification to another level with their SoFi USD Stablecoin in January 2026. The key differentiator here will be that it will be backed by the Fed bank account, meaning zero credit, liquidity, and duration risks. With SoFi boasting opportunities to distribute the Stablecoin via its vast Galileo distribution network [8 billion transactions per year], the new product can potentially become a white-label opportunity for regional banks. I am emphasizing the opportunity particularly for regional banks because they are highly likely to lack technical infrastructure to enter crypto by themselves. With SoFi's turnkey solution, they will have an opportunity to try this high-growth market with limited downside. The management also said that institutional crypto trading offering is "around the corner", which will add more volume and liquidity because of large institutions joining the ecosystem. Completing the ecosystem, there are also plans to offer customers secured lending against digital assets which fits perfectly into this crypto ecosystem as this piece of the puzzle will help to monetize customers' crypto holdings. This approach to building an end-to-end crypto ecosystem exemplifies SOFI's "one-stop-shop" commitment because they are not just offering isolated products but they are building an integrated platform where each component complements the others. This creates compounding synergies that isolated products are unable to deliver. For example, a customer who starts with crypto trading may use SoFi Stablecoin for transactions, take secured loans against their holdings, and then send the proceeds to his or her grandmother in Mexico. All without leaving the platform. Risks and uncertainties SoFi's endeavors in building its crypto ecosystem look really promising because the management already succeeded in building classical banking services ecosystem. However, we have to keep in mind that there will always be execution risks because we are speaking about quite sophisticated products like trading and lending. Moreover, regulation in digital assets is highly likely to evolve further given the industry's relatively young age. And these regulatory changes might be unfavorable for SOFI. Last but not least, the new "crypto winter" might significantly undermine overall interest in digital assets. Seeking Alpha Despite all these uncertainties related to the crypto ecosystem in the making, SOFI is valued quite generously. Of course, differentiated approach together with rapidly expanding "one-stop-shop" ecosystem deserves a premium. However, I am not quite sure that this premium compared to the sector median should be measured in hundreds of percent. Even if Wall Street's EPS growth forecasts materialize, the FY2028 estimated forward P/E ratio of above 30 is still quite high . In addition, an aggressive growth stock like SOFI usually thrives when the entire stock market is full of optimism. However, it suffers during market downturn. The largest tech stocks demonstrated aggressive rallies this year and it appears that at the moment it is time for investors to start asking about whether valuations went too far or not. In the current cautious stance prevailing in the stock market, SOFI is unlikely to soar further. TrendSpider Last but not least, SOFI usually performs poorly closer to year-ends with low win-rates in November and December. Historical seasonality does not guarantee future results, but in the current situation of high multiples and the entire stock market slightly cooling down, I think that seasonality is likely to repeat itself. Bottom line To conclude, SOFI remains a "Hold" at the moment because I think that all the positives and negatives offset each other. The management continues executing well the "one-stop-shop" strategy, but this fundamental potential is already priced in. It is difficult to expect large premiums in the current environment of the broader market's relative weakness.
