Why I Just Sold All of My SoFi Stock

SoFi Technologies (NASDAQ: SOFI) has been on a roll. Unfortunately, that roll is heading downwards.

Over the last three years, SoFi's share price has been cut in half. So far in 2024, the fintech stock has fallen more than 25% while the S&P 500 has jumped nearly 15%.

I recently sold all of my SoFi stock. But it wasn't because of the disappointing declines. I had other reasons for selling.

Why I initially bought SoFi stock

Before I get to why I just sold SoFi, let me first explain why I initially bought the stock in the first quarter of 2021. Technically, I never bought SoFi shares. I invested in Social Capital Hedosophia Holdings V, a special purpose acquisition company (SPAC) that merged with SoFi soon after I started a position in it.

SoFi's innovation especially stood out to me. As it still does, the company back then offered a "one-stop shop" for financial services on its smartphone app. Users could do nearly anything financially on their phones -- apply for loans, buy insurance, trade stocks and cryptocurrency, transfer money to other people, and more.

I liked that SoFi planned to acquire Golden Pacific Bancorp. Since this deal would set the stage for SoFi to obtain a national bank charter, I expected the company's costs of funding loans would decline and that it would be able to offer even more products and services to customers.

Most importantly, I thought SoFi's member and revenue growth would grow rapidly. The company projected at the time that revenue would increase nearly 6x by 2025 to close to $3.7 billion. I figured this kind of growth would drive SoFi's share price significantly higher. I expected profitability would be on the way, too.

What's changed?

Many of the reasons I liked SoFi in 2021 still hold. SoFi remains innovative. CNBC named it one of the world's top fintech companies last year. SoFi continues to introduce new products and services regularly.

The company's acquisition of Golden Pacific Bancorp closed in February 2022. SoFi got the national bank charter it wanted.

Membership has grown rapidly. The lowest year-over-year member growth in a quarter since I bought the stock has been 44%. Revenue has soared, too. And SoFi has generated profits for two consecutive quarters.

So what's the problem? Although revenue has risen significantly, growth hasn't been nearly as strong as I hoped. Worse, SoFi's revenue growth is slowing. The company projects 2024 adjusted net revenue will be only 15% to 17% higher than the previous year's revenue.

I'm also concerned that SoFi's net charge-off ratio (NCO) for personal loans is rising. In the first quarter of 2024, the NCO was 3.45%. A year earlier, it was 2.97%.

Checking two boxes

I don't sell stocks frequently. When I do, it's usually either because my original thesis for buying the stock is no longer true or because I think there are better opportunities for my money to achieve my investing goals.

As we've already seen, my original thesis isn't fully true now since SoFi isn't delivering the level of growth I expected. However, I also believe other stocks can better help me achieve my goals. Both of my primary reasons for selling a stock were checked with SoFi, so it was time to part ways.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .