To The Moon

The prospect of Federal Reserve rate cuts could be a significant tailwind for SoFi and other fintech companies, and the current rally to new 52-week highs may have room to run.

We have prepared a breakdown of SoFi’s current strength, how rate cuts might affect it, and whether the stock can continue riding higher (including key risks).

I am holding $SoFi Technologies Inc.(SOFI)$ on the long term, so in this article, I will be sharing on how we could mapped a concise rally / base / pullback model for SOFI with price targets, probabilities, and concrete option trades we can use.

What we know about SoFi now

SoFi is doing well recently, with a number of positive catalysts:

They just reported strong Q2 2025 results: net revenue of ~$855 million, net income of about $97 million.

The company raised its full-year guidance: expected adjusted net revenue ~$3.38B, net income ~$370 million.

Member growth and product growth are strong. Membership numbers continue rising.

The stock is trading at a new 52-week high, and investors are evidently optimistic about rate cuts, cheaper funding costs, and more favourable macro conditions.

However, there are concerns:

Valuation is high. Forward P/E is elevated (~50×) and much higher than many peers in fintech/consumer finance.

Analysts (some) feel some of SoFi’s guidance and targets are ambitious, and that any misstep in growth, margins, or credit quality could lead to sharp downside.

How rate cuts can help / why they matter

If the Fed cuts rates (or signals cuts), here is how that helps SoFi:

Lower funding cost As interest rates drop, cost of deposits and the cost of capital tends to fall. For a bank-funded lender like SoFi, that can improve margins, especially net interest margin (NIM), or at least reduce pressure from funding costs.

More demand for borrowing Lower interest rates tend to increase demand for personal loans, mortgages, refinancing, and other consumer lending products. SoFi's lending/book-of-loans business should benefit.

Better EBITDA & profit leverage If they can keep costs under control, growth in loans + improved margins will help leverage to profits. SoFi’s guidance already suggests improving adjusted EBITDA margins.

Risk premium / investor sentiment tailwinds Lower rates typically shift investor preference toward growth / fintech / riskier but high-growth names. SoFi can benefit from that as well.

Can the new high continue (if rate cuts happen / get more cuts)?

We think that it is plausible. But with caveats. The upside exists; it depends heavily on execution, margins, and how macro plays out. Here are scenarios.

Optimistic Case

Base Case

Conservative Case

In this next section, we need to understand and watch key things like the risks and indicators.

Key Things to Watch (Risks & Indicators)

To decide whether the new high is sustainable, keep an eye on:

Interest rate / Fed communication → timing and magnitude of cuts, but also expectations of inflation, employment data.

Net interest margin & cost of funds for SoFi → if rate cuts don’t translate into material margin boost (or if spreads compress), that may limit upside.

Loan demand & credit quality → Personal loans, student loan refinancing etc. Rising defaults / delinquencies could bite.

Non-lending growth → Fintech services, credit cards, investment / crypto / payments platform; how diversified they are beyond lending.

Valuation expectations / guidance → They need to continue meeting or beating guidance; raising forecasts helps justify valuation. If guidance is softened, expect downside.

Competition & regulation → both fintech and banking regulation are risk areas.

Our view

Given what SoFi is showing now, and if rate cuts come (say 1-2 by year end), SoFi is fairly well placed to continue its upward momentum. But I think the upside might be more in the base case than in the overly optimistic case, unless everything goes very well.

In other words: we do agreed that the new 52-week high could be sustained and possibly surpassed, but it is increasingly “priced for perfection.” As a result, small disappointments (in margins, loan growth, defaults, etc.) could lead to sharp pullbacks.

So in the next section we have mapped a concise rally / base / pullback model for SOFI with price targets, probabilities, and concrete option trades we can use to express each view (including size, expiries, and strike examples).

Here Are Some Quick Facts We Used

SoFi Q2 2025: record adjusted net revenue ~$855M and GAAP net income $97M; strong adjusted EBITDA margin ~29%.

SOFI is trading near a fresh 52-week / all-time high (~$27.6–$27.8 range in mid-Sept 2025).

Wall Street analyst consensus price targets are materially below the current price (consensus targets range roughly $18–$21), implying downside risk if expectations slip.

Probabilities (subjective — based on current macro + company news)

Rally (Bull) — 30% — rate cuts arrive and SoFi sustains strong revenue/margins; multiple expansion continues.

Base (Choppy / modest upside) — 50% — one cut, improved funding costs, growth continues but with volatility; stock grinds higher modestly.

Pullback (Correction) — 20% — cuts delayed or inflation surprises, or SoFi misses guidance / credit deteriorates; re-rating to analyst targets.

We are assigning the largest probability to the base case because the market already prices some cuts and SoFi has earnings momentum, but the valuation and analyst dispersion increase downside risk.

Price-target bands (timeframe: 3–6 months)

Rally target (30% prob): $35 — $38 (≈ +25% to +40% from $27.6).

Base target (50% prob): $29 — $32 (≈ +5% to +15%).

Pullback target (20% prob): $19 — $23 (≈ −15% to −30%, consistent with analyst average PTs near $18–$21).

Option strategies (real examples — use position sizes appropriate to our portfolio)

Notes before examples

Pick positions sized so the max loss equals an amount you are willing to risk (e.g., 0.5–2% of portfolio).

We give expiration windows (3-6 months) — you can shorten for cheaper protection or lengthen for conviction. (you may refer to my previous option setup example on SoFi.

1) If we expect a Rally (Bullish — 30% prob)

Trade: Bull Call Spread (defined risk, lower premium than buying calls outright)

Example (6-month expiry)

• Buy SOFI 1x 30 CALL (6-month)

• Sell SOFI 1x 40 CALL (6-month)

• Outcome: Max profit = $10 × 100 − net debit; breakeven = 30 + net debit.

• Why: Captures a material rally while limiting premium outlay; selling the 40 call finances the long call.

Sizing tip: If you want to risk $1,000, buy 1 spread if premium ≈ $10 (net).

Aggressive variation: Buy 1x 32.5 call and sell 1x 45 call (wider spread) if you expect a very strong move.

2) If we expect Base / Mild Uptrend with Pullbacks (Neutral-to-Mild-Bull — 50% prob)

Trade A (income + mild bullish exposure): Call Ratio Spread (limited debit, funded by selling extra calls) Example (3–4 month expiry)

• Buy 1x 30 CALL

• Sell 2x 35 CALL

• Why: Low cost to own upside up to ~35; profitable if stock drifts up modestly. Be careful: uncovered short calls create risk if SOFI explodes much higher — keep short calls covered or size small.

Trade B (protection for long holders): Collar

• Long 6–12 month shares or hold shares.

• Buy 6–12 month 22 PUT (floor protection)

• Sell 6–12 month 40 CALL (funds part/all of the put)

• Why: Protects downside while giving up some upside — useful when we expect modest gains but want to limit drawdowns.

3) If we fear a Pullback / Correction (Bearish / Hedging — 20% prob)

Trade A (defined downside hedge): Bear Put Spread (cheaper than outright put, defined loss) Example (6-month expiry)

• Buy SOFI 1x 25 PUT

• Sell SOFI 1x 18 PUT

• Why: Profits if SOFI falls toward the $19–$23 band but limits premium cost.

Trade B (fast volatility hedge): Long out-of-the-money (OTM) puts short-dated

• Buy 1x 1-2 month 22 PUT as immediate insurance if we expect a near-term shock. Cheaper, but needs renewal if pullback is later.

Trade C (tail protection for portfolio): Long VIX-linked instruments or buy deep OTM puts on SOFI — effective if we want protection from broad risk-off spikes.

Concrete example allocations (illustrative)

Assume we want limited exposure and your target risk per trade is $1,000:

Rally bull call spread: if net debit ≈ $6.00 (≈$600 per contract), buy 1 spread = $600 risk.

Base call ratio spread: small size; place 1 ratio for a net debit near $200–$400.

Pullback bear put spread: if net debit ≈ $8 ($800 per contract), buy 1 = $800 risk.

Adjust the number of contracts to keep total at or below your $1,000 per-view risk budget.

How to monitor & when to adjust

If Fed signals clear easing and SoFi beats next quarter → roll or widen the bull call spread (take profits or add another bullish ladder).

If inflation surprises higher or loan delinquencies rise → trim risk, close bullish spreads, or widen put protection.

If implied volatility spikes (options expensive) → prefer defined-risk spreads (buy bear put spread vs naked puts) or sell premium if comfortable.

Summary

A series of rate cuts in 2025 is generally seen as a positive for SoFi's stock, given its dependence on lending and the potential for increased demand. However, the stock's future performance will also depend on the company's ability to continue its strong growth trajectory, manage risks, and navigate the competitive landscape.

While we can do option trading to take advantage of any potential upside and also to protect our trade against any unexpected downside, there are some risks we need to consider.

These are frameworks, not personalized financial advice. Option premiums and strike selection should be set using live quotes and sized to your portfolio and risk tolerance. Past performance does not guarantee future returns.

Analyst targets and consensus are heterogeneous; consensus being below current price is a cautionary datapoint.

Appreciate if you could share your thoughts in the comment section whether you think it is a good time to plan for a longer period option trade for SoFi.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.