SoFi Technologies (SOFI 3.03%) is one of the more successful fintech companies, so it's no surprise that many investors are interested in buying SoFi stock. It has been growing quickly and reported $24.4 billion in deposits as of the third quarter of 2024.
Since SoFi is a publicly traded company, any investor can add it to their portfolio via a brokerage account. In this guide, we'll go over how to invest in SoFi stock and whether it's a good idea.
How to buy
How to buy SoFi stock
You can buy SoFi stock by following a few simple steps.
Step 1: Open a brokerage account
A brokerage account allows you to buy stocks and other types of investments, including mutual funds, bonds, and options. If you don't have one already, you'll need to open one. You can find many of the top options on Motley Fool Money's list of the best stock brokers. You can also invest in SoFi through an individual retirement account (IRA) to potentially save on taxes.
Once you've found a stock broker, select the option to open an account. You'll be asked to provide personal, employment, and financial information. It's a fairly quick process that can be completed within 15 to 20 minutes.
Step 2: Figure out your budget
Next, decide how much you want to invest and whether this will be a one-time lump-sum investment or an investment you make regularly. For example, if you have some money saved, such as $1,000 or $5,000, you may want to invest it all at once. Or you could go with dollar-cost averaging, where you invest a set amount of money on a schedule, such as $500 on the 1st of every month.
You'll also need to decide how much of that money you want to invest in SoFi stock. If you don't already have an investment portfolio, avoid putting all your money into a single company. It's better to spread your funds around to build a diversified portfolio. A good rule of thumb is to hold at least 25 companies to reduce your risk.
Step 3: Do your research
A key part of investing in stocks is to always do your homework before making any investing decisions. You may have already done this and decided that you think SoFi is a good choice. But if you're only planning to buy it because you've heard it has done well or has tons of growth potential, dig deeper before you buy.
There's a lot that goes into researching a stock. You should look at the numbers, including the price-to-earnings (P/E) ratio and debt-to-EBITDA (earnings before interest, taxes, depreciation, and amortization) ratio. Also, evaluate the business as a whole, including its competitive advantage and management.
Step 4: Place an order
The final step is to place your order for SoFi stock. Search for it on your stock broker's trading platform using its ticker: SOFI. Enter the amount you want to buy, and select the type of order you want to make.
There are a couple types of stock orders: market orders and limit orders. A market order places your order immediately but doesn't guarantee a specific price -- it's typically near the ask price for buy orders. A limit order allows you to specify a price for your order, which will only be executed if that price is available.
Should I invest?
Should I invest in SoFi?
You should consider investing in SoFi if you're looking for growth. There's a lot to like about SoFi as an investment opportunity. It provides a wide range of financial products and services, including:
- Bank accounts.
- Credit cards.
- Brokerage accounts.
- Mortgages.
- Student loans.
- Insurance.
Private Student Loans
It's also good at getting members to use multiple services by providing a quality customer experience, which includes educational resources and personalized recommendations. And it's a forward-thinking company that implements artificial intelligence (AI) to reduce operating costs.
Another reason to be bullish on SoFi is its growth over the years. The company's number of members has been soaring, with consistent year-over-year growth rates exceeding 30%. It has also regularly seen double-digit revenue growth.
Keep in mind that growth stocks like SoFi tend to be more volatile. One particular concern some investors have with SoFi is that it could be overvalued. More conservative investors and those who already have aggressive portfolios may want to be careful about investing in SoFi.
Profitability
Is SoFi profitable?
SoFi is profitable as of 2024. During the first three quarters of the year, it posted net income of $166.19 million, compared to $348.66 million in losses during the same period of 2023.
Total revenue for SoFi increased by 35% from 2022 to 2023. That trend has continued in 2024, and in a strong third quarter, revenue grew year-over-year by 30%.
SoFi has also continued to add more members. Total members reached 9.4 million in the third quarter of 2024, up 35% from 7 million a year before.
Dividends
Does SoFi pay a dividend?
SoFi doesn't currently pay a dividend, and it hasn't paid one before, either. Right now, SoFi is generally considered a growth stock, and those usually don't pay dividends. It may do so in the future, as there are several bank stocks that make dividend payments to shareholders. But if you're interested in dividend stocks, you'll need to look elsewhere.
Commercial Banking
ETF options
ETFs with exposure to SoFi
An alternative to buying SoFi stock is to buy one of the many exchange-traded funds (ETFs) that invest in SoFi. An ETF pools investor money and puts it into a large number of securities. This type of fund typically has very low fees, making it a cost-effective way to invest.
Here are some of the top ETFs with exposure to SoFi:
- The ARK Fintech Innovation ETF (ARKF 2.25%) invests in companies that are engaged in financial technology (fintech) innovation. SoFi is one of its larger holdings.
- The Global X FinTech ETF (FINX 0.81%) invests in companies that provide financial technology products and services, and SoFi makes up a sizable chunk of its holdings.
- The Vanguard Small-Cap ETF (VB 0.16%) allows you to invest in over 1,400 small-cap stocks in one purchase.
- The Vanguard Total Stock Market ETF (VTI 0.56%) is an easy way to invest in the entire U.S. stock market, including SoFi.
A big advantage of going with an ETF is that it makes investing easier and far less time-consuming. If you invest in individual stocks, you'll need to do much more research to build out your portfolio.
However, you do give up control when investing in ETFs. SoFi will be a much smaller portion of your portfolio this way. Most ETFs with SoFi allocate less than 1% of the money to it. You could also pick an ETF you like so that you have a diversified portfolio while also investing in SoFi on the side.
Stock splits
Will SoFi stock split?
SoFi carried out a one-for-five reverse stock split after the close of trading on Oct. 1, 2024. Shares began trading on a split-adjusted basis the following day.
The motivation for the reverse stock split was to make SoFi stock more attractive to investors, as it had a low share price. Some people consider low-priced stocks risky, and brokerage firms can be reluctant to recommend them to clients.
Related investing topics
The bottom line on SoFi stock
With how much it has grown, SoFi is an exciting company for investors. It's certainly one to watch and could be a solid investment choice if you're looking for growth potential. If you decide to buy it, make sure you're prepared to ride out the ups and downs, as it can be volatile.
For those who know they want to buy SoFi stock, all it takes is a brokerage account with cash available. Log in to your account and pull up SoFi on the trade tool, and you can place an investment order.
FAQ
Investing in SoFi FAQ
Is SoFi a buy, sell, or hold?
The consensus on SoFi is that it's a hold right now. That being said, it's best to come to your own decision based on your research of a company. While analysts may consider SoFi a hold, it could be worth a buy for aggressive, growth-focused investors.
Is SoFi a good company to buy?
Many investors consider SoFi a good company to buy. Its revenue, income, and member numbers have all been growing, and the financial products it offers are highly regarded.
Who owns the most SoFi stock?
Vanguard Group owns the most SoFi stock as of reporting on Sept. 30, 2024. At that time, Vanguard Group owned 89.44 million shares of SoFi, over 40 million more than any other investment group.
