Will SoFi help you create a millionaire?

SoFi Technologies (SOFI) is well-known for challenging the financial services industry with a focus on user-friendly approach. And it does a great job of acquiring customers.

But for such an innovative business, it is fintech stocks was a huge disappointment. It is down 33% in 2024 (as of August 2) and currently trades 74% below its February 2021 peak.

Now may be a good time to buy SoFi stock at a low. But are these stocks millionaires?

Disrupting financial services

What SoFi has accomplished in its 13 years since its founding is commendable. The company is disrupting financial services with its digital-only offerings, providing its customers with a better user experience than what traditional banks are known for. Through the SoFi mobile app, you can open a checking or savings account, invest in stocks or cryptocurrencies, and get a personal loan.

The strategy is simple. SoFi’s management team is focused on introducing new products and services while also targeting younger and more affluent consumers. What started as a student loan refinance business is now a respected banking entity.

Admittedly, growth has slowed. Gone are the days of 50% or more annual revenue gains. But SoFi has continued to grow at a healthy clip, which is even more impressive given the uncertain economic environment the United States has been facing.

The company reported $599 million in sales in the second quarter, up 20% year over year. That was driven by SoFi adding 643,000 new customers (which it calls members), bringing its total to nearly 8.8 million.

No one knows what SoFi’s total addressable market is. But the country’s banking sector is truly vast. CEO Anthony Noto has said he wants it to one day be a top-10 financial institution.

SoFi Profit Potential

The typical playbook for many growth tech companies is to invest all of their resources into attracting customers, pouring money into product development and marketing efforts. To be clear, SoFi has historically adopted this strategy. But now it’s starting to bear fruit.

This is because the business is now profitable. In fact, the company earned $17 million in Q2 net income was the third consecutive quarter with a positive net result.

SoFi doesn’t operate any physical bank branches. This digital-first approach should theoretically result in a scalable business model. A largely fixed-cost structure could lead to profits once it reaches a certain revenue level. SoFi appears to have passed that point. Of course, the company will continue to spend money on marketing and product development, but those investments are now being leveraged into higher sales and a higher customer base.

The executives believe the future is incredibly bright. They raised their full-year guidance, now projecting net income in the range of $175 million to $185 million. And in 2026, SoFi is expected to post earnings per share of $0.68 (midyear), followed by annual growth of 20% to 25%. It’s hard not to be optimistic when thinking about those goals.

Join the seven-figure club

Based on the growth data, combined with the start of what looks like a consistent earnings run, SoFi looks like a solid business that should be on investors’ radars. But can the stock make you a millionaire?

As SoFi stock underperforms, it trades at a reasonable price price to sales ratio 2.9. This is well below the historical average and adds potential upside to the equation should the market price the stock higher.

If you’re bullish on SoFi, it makes sense to buy shares with the intention of holding them for a few years. Those who can not only invest more capital up front, but who can extend their time horizon, have a better chance of achieving millionaire status.

Neil Patel and his clients have no position in any stocks mentioned. The Motley Fool has no position in any stocks mentioned. The Motley Fool has a disclosure policy.