Summary SoFi's re-entry into crypto unlocks a massive new market, with stablecoins and crypto trading poised to drive significant revenue growth. The fintech exited the crypto business in late 2023 due to regulatory pressures to gain the banking license. Crypto fintechs are currently trading at much higher valuation multiples due to the scalable and capital-light business models. Despite recent stock highs, SoFi remains undervalued at 16x EBITDA, especially compared to crypto peers like Robinhood and Circle. While SoFi Technologies, Inc. ( SOFI ) has reported impressive financial results since exiting the crypto sector back in late 2023, the stock has now soared to multi-year highs on just announcing the future launch. The fintech should unlock a whole new segment that has launched a peer stock to a far higher market cap. My investment thesis remains ultra-Bullish on SoFi, even at recent highs, due to a still relatively cheap valuation and a large market opportunity. Source: Finviz Golden Opportunity Back on June 25, SoFi announced the return of crypto to the fintech platform. The company plans to initially offer cryptocurrency trading in the popular coins like Bitcoin and Ethereum, along with plans to offer stablecoins, the opportunity to borrow against crypto assets and expanded payment options. Source: SoFi website For now, members have to join a waitlist with an unknown timeline to product launches. The U.S. Senate just passed the Genius Act providing a regulatory path for stablecoins, opening up the door for fintechs like SoFi to launch such products. The stablecoin market is forecasted to rise more than tenfold by 2030 to between $3 trillion and $4 trillion , up from only ~$250 billion now. Analysts at Citizens JMP see the potential for annual revenues from stablecoins opening up a $100 billion opportunity. SoFi originally offered limited crypto trading of up to 20 tokens back in 2023 before exiting the opportunity to pursue a digital bank. SoFi handed the operations over to Blockchain.com and apparently included crypto assets of just under $140 million . The fintech didn't provide a lot of details regarding the crypto business size, probably due to its infancy position, but SoFi has experience in the area and could potentially lead to a snappy re-launch. Robinhood started offering crypto a few years back, and the company only topped $50 million in quarterly revenues in Q1'24. Robinhood recently saw revenues jump to $610 million during the Q4/Q1 period, for an annualized rate above $1 billion. The company reported crypto notional trading volumes in Q1 of $46 billion, vastly larger than the limited balances held by SoFi back in late 2023. The online broker lists a cryptocurrency asset balance of $28 billion to end March. Robinhood has total platform assets of $221 billion, so a lot of questions will exist on whether SoFi has the investment products to achieve any level of success, as the brokerage business isn't a prime focus. Source: Robinhood Q1'25 presentation Left Behind Robinhood has ridden these transaction-based revenues from both crypto and stock options trading to produce an $87 billion market cap, now over 4x the valuation of the similarly sized SoFi previously focused on lending products. SoFi has the potential to use the additional growth from transaction-based revenues to boost the stock valuation. Data by YCharts Even recent IPO Circle Internet Group ( CRCL ) has seen the market cap start to $45 billion based on offering a 2nd largest stablecoin product. Clearly, the market is offering higher valuations to fintechs involved in the crypto sector. Robinhood has seen adjusted EBITDA targets suddenly double the estimates for SoFi. Robinhood now trades at nearly 40x EBITDA targets of $2.25 billion for 2026 while SoFi only trades at 16x a forecast of $1.27 billion for next year. Data by YCharts SoFi has the opportunity to unleash crypto revenues, along with the push into the SoFi Plus subscription service, similar to how Robinhood used the Gold Card product to attract a horde of new customers. SoFi had already forecast 25% annual growth over the next 3 years, while analysts generally aren't forecasting these same growth rates with estimates for growth below 20% in both 2026 and 2027. Source: Seeking Alpha If crypto generates the next inflection point for SoFi, the stock has substantial upside. The fintech would see both a boost to already solid sales growth forecasts and another step up in profits with a possible corresponding valuation multiple boost due to the shift away from relying on lending products for growth while moving to scalable, capital-light revenue. The risk is that SoFi is now late to offer a crypto product with Coinbase ( COIN ), Robinhood and other platforms having first mover advantage. In addition, SoFi might always have a valuation tied to the risks associated with lending products. Takeaway The key investor takeaway is that SoFi already offered a compelling valuation and business model, but crypto could take the fintech to the next level. The stock has a compelling valuation at only 16x adjusted EBITDA targets with much faster growth rates and the opportunity for crypto and new subscription services to boost SoFi to another level.
