To The Moon

$SoFi Technologies Inc.(SOFI)$

Today, we’re diving into SoFi stock. It's the first trading day of 2025, and while the market overall is seeing a solid green day—especially in fintech and growth stocks—SoFi is not following the trend. Early last night, pre-market reports revealed a downgrade and sell rating from KBW, which triggered a significant reaction in the stock.

Market Context: On the first trading day of 2025, the stock market is generally green, particularly for fintech and growth stocks. However, SoFi's stock is down significantly, dropping ~8.5%, with an early dip of ~9%.

Catalyst for Decline: A downgrade and sell rating by KBW (Keefe, Bruyette & Woods) was issued overnight, targeting SoFi with an $8 price target, a 48% downside. The downgrade was widely distributed across numerous media outlets (~12 in total) in what appears to be a coordinated effort to spread fear and enable short-selling profits.

Critique of Analysis: The report allegedly uses outdated metrics, valuing SoFi at a 10x forward P/E ratio—on par with legacy banks like Bank of America—despite SoFi's higher growth potential (projected 500-600% EPS growth over the next few years).

Historical Patterns: This isn’t the first time KBW has targeted SoFi. A similar downgrade occurred on January 3, 2024, citing slowed growth and limited profitability, which proved inaccurate as SoFi later exceeded expectations in key metrics such as member growth, origination lending, and technological advancements.

Growth Outlook: The narrative argues SoFi is undervalued based on its high growth trajectory, including its Galileo platform, robust origination metrics, and increasing profitability potential.

Market Manipulation Allegation: The coordinated nature and timing of the downgrade, coupled with KBW's historical inaccuracies in their SoFi valuations, suggest a deliberate attempt to profit from short-selling.

This downgrade appears targeted and orchestrated to generate profit from fear. Over the past 72 hours, this rating has been pushed across nearly a dozen media outlets, likely coinciding with short positions or put options designed to capitalize on the dip.

The downgrade cites legacy banking metrics, valuing SoFi with a 50x forward P/E ratio, which is inconsistent given its growth potential. For context, legacy banks like Bank of America are trading at 15x P/E with much lower growth rates. SoFi, by contrast, is expected to see substantial EPS growth—up to 500% over the next two years—making the $8 price target nonsensical.

Interestingly, this isn’t the first time KBW has issued such downgrades. Exactly one year ago, they made a similar move, and SoFi went on to outperform significantly. This pattern suggests a repeated tactic of short-term manipulation.

Despite this downgrade, SoFi is positioned for a strong 2025. The company has seen rapid growth, with 10 million members, record-breaking origination lending, and strategic tech platform deals. As we approach the Q4 earnings report, expected in the next 48 hours, the focus should remain on fundamentals.

The SoFi Hype

Beside the Downgrade, I want to address the recent hype around SoFi stock, I understand there's been a lot of discussion, misinformation—even fake stats. Let’s aim for a more informed conversation and focus on the key points.

The Positives

Promoting Buy-and-Hold Investing The best part of the SoFi YT videos I reviewed was their emphasis on long-term investing. They underscored the power of compounding and the benefits of holding onto quality stocks without constantly trading or taking profits. This strategy aligns with how wealth is built—by letting great companies work for you over time. For instance, my 50,000%+ return on Apple required one simple action: holding the stock. SoFi’s leadership, like CEO Anthony Noto, is focused on making the company profitable, which benefits long-term shareholders.

Goal Setting Another strength was the encouragement to set specific investment goals. Many investors, unfortunately, lack a clear plan, leading to mismatched portfolios. Whether you're aiming to retire in a year or build long-term wealth, aligning your stock choices with your goals is essential. For example, owning 1,000 shares of SoFi at a conservative growth rate (e.g., 12% annually) can give you a tangible target to evaluate. These article provided a starting point for planning, which is often overlooked in investing discussions.

The Negatives

Unrealistic Projections Many of the videos relied on speculative and overly optimistic projections. While revenue growth is crucial, it doesn’t guarantee equivalent stock price growth—especially if margins or earnings per share (EPS) don’t align. Projections should be grounded in realistic assumptions, not speculation or "hopium."

Ignoring Valuation None of the videos emphasized the importance of buying at a reasonable valuation. Simply owning 1,000 shares at any price is not the same as accumulating shares at fair value. For example, purchasing SoFi at $4-$5 per share during undervalued periods is vastly different from buying at $20+. Valuation is key to maximizing returns.

Encouraging Lottery Investing While unintentional, some messaging resembled "lottery investing"—the idea that a small investment will miraculously turn into millions. True wealth-building comes from consistent investing in great companies over time, not betting everything on a single speculative outcome.

The Hard Truth

The idea of owning 1,000 shares is relative. For some, it’s a significant commitment; for others, it’s a fraction of their portfolio. What matters is your individual risk tolerance, financial goals, and conviction in SoFi. Whether you own 100 shares or 10,000, your investment strategy should align with your plan and comfort level.

Ultimately, investing is not about hitting a magic number of shares. It’s about consistency, setting realistic goals, and understanding the companies you invest in. Stick to a disciplined approach like dollar-cost averaging (DCA), and focus on aligning your portfolio with your unique circumstances and long-term objectives.

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