Cathie Wood Sees Something in SoFi. Here’s Why ARK Made a $6.8 Million Bet
Cathie Wood is doubling down on SoFi Technologies (SOFI), even as investors have been heading for the exits. Wall Street also can’t seem to make up its mind about this fintech stock. Yet, on Nov. 9, ARK Invest swooped in to buy about $6.8 million in SoFi shares at $16.75, strengthening its stake. But that wasn’t Wood’s only move. ARK also scooped up $16.2 million of Nvidia (NVDA) shares and picked up more of Scribe Therapeutics (SCTX) stock while trimming its holdings in Block (XYZ) and Bullish (BLSH).
Yet it’s the SoFi move that stands out, especially with the stock tumbling nearly 40% this year.
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Despite the drop, the digital bank continues to grow rapidly, expanding its revenue streams and posting increasingly robust profits. With the stock trading well below its highs, could this pullback offer investors an attractive entry point?
ARK’s Fresh Bet Puts SoFi in the Spotlight
ARK Invest’s $6.8 million purchase of SoFi shares comes as the stock has taken a heavy beating. That also fits Cathie Wood’s investment style. She is known for spotting companies with strong long-term growth potential and adding to positions when market selloffs create opportunities to buy at lower prices. Rather than chasing stocks after a rally, Wood often invests amid downturns in businesses she thinks will benefit from new technologies and industry changes.
SoFi’s expanding financial ecosystem and accelerating profitability could explain why it has caught ARK’s attention during this pullback. SOFI stock makes up 3.3% of Wood’s portfolio. Wood’s recent buying spree might catch investors’ eye, but that alone isn’t a green light to buy the stock right now. The real question is whether SoFi’s growth story and earnings outlook justify buying shares at today’s price.
SoFi Is Building a Much Bigger Financial Ecosystem
Once known mainly for student loan refinancing, SoFi now offers banking, investing, personal loans, credit cards, and cryptocurrency services. This new approach seems to be working. In the third quarter, its membership grew by 35% year-over-year (YoY) to 17.1 million, and the total number of products rose by 44% to 26.7 million. Notably, 51% of new product openings came from existing customers, showing that people are more engaged with SoFi’s platform.
More importantly, SoFi’s diversification beyond lending is worth paying attention to. Fee-based revenue was $571 million, making up 42% of total revenue. The Financial Services segment brought in $525 million, a 25% increase from last year, while lending added $807 million. Total loan originations reached $16.9 billion. The Loan Platform Business earned $153 million by originating loans for third-party investors, allowing SoFi to grow without keeping every loan on its balance sheet.
Growth Story Is Getting Bigger, but So Are the Risks
SoFi’s growth is leading to higher profits. In Q3, adjusted net revenue rose 44% YoY to about $1.4 billion. Adjusted net income was up 74% to $243 million, and adjusted EPS grew 64% to $0.18. Management raised its 2026 adjusted net revenue forecast to $5.04 billion, implying 40% annual growth. The early 2027 outlook is even more ambitious, with adjusted net revenue of $6.4 billion, adjusted EBITDA of $2.24 billion, and adjusted EPS of $0.90. This revenue target would mean a 27% increase, driven by ongoing growth in lending and financial services.
However, rapid lending growth also opens the door to credit risks. SoFi posted a 3.4% all-in personal loan net charge-off rate in Q3, marking progress from last year. Still, as the loan portfolio expands, investors would be wise to keep a close eye on borrower repayment patterns, especially if the economic climate turns stormy.
The technology platform also deserves attention. Revenue slipped 24% YoY to $87 million after losing a major client, yet excluding that, revenue increased 18%. Management appears optimistic, projecting a return to 25% growth when conditions normalize, but the proof of that rebound is yet to be seen.
While SoFi reported a strong third quarter, much of the share price damage had already been done this year owing to interest-rate sensitivity and balance-sheet concerns. If SoFi delivers its 2027 targets while maintaining credit quality and improving capital efficiency, today’s lower share price could eventually look attractive.
Is Cathie Wood’s SOFI Stock Bet Worth Following?
SoFi has several qualities that appeal to growth-oriented investors like Cathie Wood. Its digital financial ecosystem is expanding, customer engagement is rising, fee-based revenue is growing, and profitability is improving. Q3 earnings showed the company is developing beyond just digital lending. Still, its ambitious forecasts leave little room for error. To meet its goals, SoFi will need to keep growing its customer base, manage credit losses, and deliver on its estimated earnings. The next few quarters will be important in determining whether the opportunity in this fintech stock is real.
Wall Street’s opinion on SOFI stock is a mixed bag. The overall consensus is a “Moderate Buy,” but opinions vary. Ten of 28 analysts rate it a “Strong Buy,” two call it a “Moderate Buy,” about 11 recommend holding, two suggest a “Moderate Sell,” and three rate it a “Strong Sell.” With an average target price of $20.74, analysts see room for the stock to rise by 22% from where it stands now. The most bullish target price sits at $30, hinting at a possible 76% surge over the next 12 months.
On the date of publication, Sushree Mohanty did not directly have a position in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com