The share price of SoFi Technologies (NASDAQ: SOFI), an online bank and leading financial technology (fintech) company, has more than doubled over the past year. The San Francisco-based company has done a great job of expanding its services to appeal to a wider consumer base, which in turn has pushed sales and earnings — along with SoFi’s stock price — higher.
Despite its growth, there are indications that consumers are trimming their spending amid some economic uncertainty. Here’s how it might impact the company and where SoFi could be three years from now.
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Sales and memberships will likely continue to climb
By almost all measures, SoFi is doing quite well. The company increased its members by 34% in the first quarter, reaching nearly 11 million. That growth helped spur the company’s adjusted sales, which rose 33% to $770 million in the quarter. Meanwhile, adjusted earnings per share soared 200% to $0.06.
The strong quarter led SoFi’s management to raise its revenue guidance to a range of $3.2 billion to $3.3 billion for 2025. Management said SoFi is off to a “tremendous” start in 2025 and that sales growth was its fastest in the past five quarters.
What’s more, SoFi’s fee-based revenue spiked 67% to $315 million in the quarter, and the average number of services each SoFi member uses is 1.4, indicating that SoFi has room to expand its fee-based services to its customers.
With SoFi on very solid footing right now and management recently raising its guidance, there’s likely more to look forward to from the company over the next several years.
SoFi’s on the right track, but economic questions remain
When President Donald Trump announced his tariff policies, investors panicked, and most stocks fell. SoFi wasn’t immune, and its share price tumbled 20% in one week alone. It’s recovered since then, but some of the uncertainty surrounding tariffs and the economy in general has remained.
Consumer sentiment has risen recently, but it’s still down about 20% from December. Americans have pulled back on their retail spending and travel spending. All of this matters because if consumers are feeling unsure about the economy, they’ll be less likely to get a mortgage, take out a loan for a small business, or sign up for a new credit card, all of which SoFi offers.
There’s no reason to panic if you’re a SoFi investor, but I think it’s worth pointing out that the past year of growth SoFi has enjoyed may not look like the upcoming few years. Even if tariffs don’t end up weighing down the economy, the mere threat of them has already caused some Americans to curb their spending.
What does all this mean for SoFi over the next three years?
I think the next few years will likely be a mix of growth and uncertainty for SoFi. The company has done a great job of expanding its financial services and adding new customers, both of which have driven revenue and earnings growth.
But uncertainty in the financial space and the economy remains elevated. While unemployment is still relatively low, and steady at 4.2%, there are some indications that hiring is slowing down. If tariffs negatively impact consumer spending or cause inflation to rise, as some fear, you can expect SoFi and other fintechs to be affected by slower consumer spending.
I don’t think it’s necessarily a reason to avoid SoFi’s stock right now, but I would be cautious about expecting the stock to perform the same way it has over the past couple of years. If you do buy shares, it may be smarter to start with a small position and add to it over time.
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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
