I've spent the last couple of days digging through $SOFI's Q1 2026 filings and what is so surprising is the stock's movement in relation to where the company is headed. The company just posted it's 10th straight profitable quarter which showed that revenue grew 43% YoY and crossed the 40 billion dollar mark in deposit. But the stock is down almost 40 percent YTD and forward P/E is around 25-27x, below where it used to trade over the last 2 years avg.
If we look at the forward earnings and growth metrics alone, the stock really appears cheap at this point. However, there is a catch we shouldn't just dismiss. Before then, let me walk you through what is actually happening at the moment.
**The growth flywheel everyone said would never spin**
Wallstreet initially thought $SOFI would bleed itself dry as it tries to scale on marketing. But the numbers are showing something different. How will you explain a situation where *products are growing faster than members*? It simply means existing customers are signing up for more on $SOFI and it's the cheapest growth present. $SOFI is retaining and convincing its existing members to deepen their relationship with their platform while still attracting new ones.
* Members: 14.7M, +35% YoY - With a record 1.05M added in Q1 alone
* Products: 22.2M, +39% YoY - Outpacing member growth
* Cross buy rate: 40% (Q4 2025). Shows growth is largely organic.
**The real moat is the Bank Charter**
It may read like a regulatory footnote but SoFi has fundamentally changed their cost of capital. They've cut their funding costs drastically by leaning on cheap consumer deposits rather than expensive warehouse credit lines.
* Deposits: $40.2B, up $2.7B in a single quarter
* Funding mix: 96% deposit, up from 78% in 2023
* Estimated 622M/yr in interest savings, holding net interest margins at 5.94%. Most regional banks fail to reach this level.
**The credit question- Who is actually borrowing?**
This questions occurs every now and then especially when $SOFI's macro headlines turn sour. So let's look at the borrowers profile rather than the fear.
* Personal loans: Avg borrower $154k income, 745 FICO
* Student loans: Avg borrower $161k income, 767 FICO
* Originations: Record $12.2B, +68% YoY
* Headline charge off rate actually fell 28bps YoY to 3.03%. (To be honest with this figure though, it appears as clean as that because SoFI sold off its late stage delinquent loans. Their own all-in estimate, if you strip that out, runs closer to 4.4%.
This is still no food for skeptics because these numbers still show that SoFi is scaling their lending business at a high pace while improving their credit quality.
**A look at their current valuations**
Their trailing multiples may appear expensive but I can tell you its because they've only become profitable just recently, which somehow distorts the maths. However, its best we cast our eyes on the forward picture at this point, because that's what truly matters.
* Q1 EPS: $0.12, doubled YoY
* Net income: $167M, +134% YoY; Revenue: $1.1B, +43% YoY
* FY26 EPS guidance: $0.60
* Forward P/E: 25 - 27x, which is below the 2 year average of 39x
* PEG: Under 1.0
* Tangible Book Value: $7.21/share, +57%
**The part the bulls turn a blind eye to**
These are the reasons I don't have a 100 percent conviction on SoFI. I'm not saying these reasons are fatal, but ignoring them is how you get caught off guard.
* Dilution: Share count went from around 1.10B to 1.21B YoY. This explains why net income jumped 134% but EPS only doubled
* Tech platform segment shrank 27% YoY following the departure of a big name client. This showed that one of it's three segments grew backward.
* ROE is only 6.6%. They raised a large amount of capital in 2025 and haven't deployed it yet. Capital ratio is about 3x the required nearing 21 percent. Do they anticipate a broader macroeconomic downturn soon or a future spike in default provisions later this year?
**Where I stand**
Traditional banks grow 4%-6% per year and get valued by their book value. SoFi is growing revenue by 43% on a balance sheet that's almost entirely deposit funded. Truth is, you can't fairly price this by the old brick and mortar playbooks. The forward multiples have also compressed harder even as the operating numbers have improved.
On the other hand, you're paying a growth price for returns that haven't fully materialized yet. If they hit their $0.60 target and convert their idle capital into double digit return, then today's price would be a steal. If growth stalls or dilution keeps eroding the per share gains, then the 6.6% ROE is what you are truly holding.
Pick your side, but just pick it with the real numbers in front of you: Holding, buying or sidelined?
*Position (none) - Not financial advice*
*Post by #FootnoteForager | the good stuff is always buried on page 140*
*Sources: SoFi Q1 2026 Earnings report and 10Q; SoFI Q1 2026 earnings report and transcript by Motley fool for NIM;*