SoFi doubles net income as sub-$50 fintechs show growth
A sharp pullback in sub-$50 fintech stocks is masking underlying operational momentum, with SoFi Technologies doubling its net income and Nu Holdings expanding its customer base to 135 million.
SoFi Technologies and Nu Holdings both traded significantly lower year-to-date as of mid-July, despite posting strong first-quarter results. SoFi shares sat at $16.84 on July 17, down nearly 39% from the start of the year and far below a 52-week high of $32.73. Nu Holdings fell 20% year-to-date to $13.60, though it has recently rallied.
SoFi’s Q1 2026 results revealed a franchise accelerating beyond its depressed stock price. The digital bank originated a record $12.18 billion in loans, a 68% surge, while total membership grew 35%. Crucially, 43% of new products were purchased by existing members, a cross-buy rate that distinguishes it from single-product digital challengers.
GAAP net income more than doubled to $166.7 million on revenue of $1.10 billion. The lender's funding structure is also improving, with $40.24 billion in deposits now covering over 90% of liabilities and reducing the cost of funds by 48 basis points. "We had an excellent Q1 delivering another quarter of durable growth and strong returns, fueled by our relentless focus on innovation and brand building," CEO Anthony Noto said.
However, the stock's 31-times forward price-to-earnings multiple suggests the market is waiting for flawless execution. Risks remain visible, as personal loan charge-offs climbed to 3.03% and the Technology Platform segment suffered a 27% revenue drop due to a major client departure. Analysts maintain a consensus target of $20.58, implying upside predicated on the firm hitting full-year adjusted revenue guidance of $4.655 billion.
Nu Holdings presents a parallel dynamic of compressed multiples accompanying rapid geographic expansion. The Latin American digital bank grew revenue 58% in its latest quarter while reaching 135 million customers. Pinterest, trading at a forward P/E of 13, rounds out the sub-$50 cohort generating mid-teens revenue growth, having beaten Q1 EPS estimates by 25%.
For market professionals, this divergence between operational metrics and stock prices highlights a valuation reset in growth fintech. These equities offer a lower-cost entry point compared to premium index leaders. However, investors must weigh whether current discounts accurately price in credit risks like SoFi's rising charge-offs or structural client concentration.
