The Rally Continues With Sofi's Stock Climbing, Driven by These Twin Engines

SoFi Technologies Inc. shares have been gaining notable momentum in trading, with two major forces propelling this latest uptick. The fintech company, which offers a range of banking and lending products, is seeing increased investor interest partly due to positive developments in the broader lending sector and partly due to market reactions following the U.S. election results.

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Mizuho analyst Dan Dolev attributes part of SoFi’s recent gains to strong results from Upstart Holdings Inc., another personal lending platform, which reported its earnings on Thursday afternoon. Upstart’s earnings report showed a significant improvement in its risk profile, which analysts believe is sending a reassuring signal to investors in similar companies like SoFi.

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As Upstart’s performance suggests a more stable lending environment, it appears to be influencing investor sentiment positively for SoFi. Dolev noted that “Upstart is injecting jet fuel into this trade,” highlighting the momentum SoFi’s stock experienced in the wake of Upstart’s favorable results.

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SoFi also reported its own earnings recently, revealing a similarly improved risk profile. This better-than-expected risk environment has helped boost SoFi’s shares, which climbed an additional 3% on Friday morning. Over the past four trading days, SoFi’s stock has risen by 12.6%, marking a notable four-session winning streak. On a broader scale, SoFi has surged an impressive 85% over the past three months, signaling a strong recovery and increased investor confidence in the neobank's diversified model.

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Dolev also interprets the recent upward trend in SoFi’s shares as part of what he calls a “catch-up” trade. After Donald Trump won a second term as U.S. president, the financial sector saw a significant rally. Bank stocks, in particular, performed strongly on Wednesday, driven by optimism that Trump’s policies might favor the banking sector. The SPDR S&P Bank ETF, which tracks a broad range of banking stocks, jumped almost 12% on Wednesday alone. In comparison, SoFi shares didn’t rally quite as much on the day, gaining just under 5%. Dolev points out that, despite SoFi’s comprehensive range of financial products, the stock may have “flown under the radar” during the initial sector-wide surge.

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One reason for SoFi’s more modest rise could be rooted in investor perceptions of the company as a neobank. While SoFi offers a wide range of banking services, including personal loans, savings accounts, and investment products, some investors may still view it as “not a real bank,” according to Dolev. This perception likely stems from SoFi’s origins as a tech-focused company with a strong digital presence rather than a traditional bank with a brick-and-mortar network. Despite this view, SoFi has steadily expanded its services to rival traditional banks and is growing its base of customers who seek modern and digital-first banking solutions.

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The neobank's diverse offerings set it apart from other financial institutions, yet this unique positioning might have led some market participants to overlook it in the initial rally that followed Trump’s election win. However, with SoFi’s stock steadily climbing over the past few days, it appears investors are increasingly recognizing the company’s potential, especially as it continues to post favorable results.

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Looking ahead, Dolev remains optimistic about SoFi’s growth prospects, maintaining an “outperform” rating and setting a $14 price target on the stock. He praises SoFi for being a “great company” that is “very well diversified,” noting that it stands out for its variety of financial products, which range from lending and personal finance management to wealth management and investments. In Dolev’s view, the improved risk profile of borrowers using SoFi’s services is an encouraging sign for future growth. With the broader financial sector benefiting from regulatory optimism and favorable economic policy under Trump, Dolev sees a supportive backdrop for SoFi’s continued expansion.

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The improved borrower risk profile is particularly meaningful as SoFi seeks to grow its market share and gain traction with a wider base of customers. By offering a mix of modern banking and lending options, SoFi appeals to consumers who value convenience, digital access, and competitive financial products. Furthermore, the recent momentum suggests investors are increasingly appreciating SoFi’s unique model and growth potential within the fintech and financial services space.

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In summary, while SoFi shares initially lagged behind the broader banking sector in the post-election rally, recent developments—especially Upstart’s favorable earnings report—have injected new optimism into the stock. With its diversified offerings and tech-driven approach, SoFi appears poised for additional growth, and analysts like Dolev are optimistic that the stock has further room to run. As SoFi continues to expand its services and demonstrate a more favorable risk profile, it may attract even more investor attention, positioning it as a strong contender within the financial services sector.

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