SoFi stock surged 7% in early trading on Tuesday after US President Donald Trump indicated plans to cap federal student loans.
The move can impose stricter limits on graduate borrowing and is expected to funnel more students toward private lenders, directly benefiting SoFi’s core business.
At the time of publication, SoFi stock was trading above $20.55, 6.8% higher from its previous close.
SoFi’s stock is up more than 180% in the past 12 months and recently set new highs.
The analysts are forecasting that the earnings will grow by 84% in 2025 and an additional 91% in 2026, which is a positive indication of the current trend of the company.
SoFi stock: What’s driving it?
SoFi’s stock has been on an upward trend after impressive fiscal performance and recent regulatory changes.
It has been beating the larger market and has only reached its peak thus far.
Some of the optimism appears related to recent policy tailwinds and strong implementation, which is widely seen as the source of potential further expansion.
As SoFi goes to its second-quarter earnings call, it has great momentum, which can be attributed to its solid performance earlier this year.
During Q1, the company posted a 20% growth in revenue and tripled its earnings, which are clear indications that the lending and refinancing operations of the company are firing all cylinders.
In Q2, investors expect the company to generate an earning of 0.06 dollars per share with 801.8 million revenue, slightly lower than the corresponding figures last year.
Nonetheless, as long as SoFi manages to trump those estimates, the stock will likely be driven higher once again and will extend the rally.
Its company leaders are also optimistic about the expansion plans, going by the steady rise in their users.
The annual revenue is expected to rise by 25.7% to over $3.28 billion and will likely exceed $4 billion in 2026.
Why it may keep going?
SoFi has come a long way from its roots in student loan refinancing. Today, it offers a full suite of digital financial services, from personal loans and mortgages to credit cards, investing tools, and even banking.
One of the company’s biggest growth engines is Galileo, its tech platform that powers embedded finance solutions for other businesses. It’s helped SoFi look beyond its core offerings and build multiple revenue streams.
SoFi is actively branching out of its capital-intensive lending activities and entering the financial services and tech platform sectors that have comparatively higher margins and low risks.
In the event that the new regulations lead to capping the federal student loans, this may lead to an increase in people seeking the private sector loans, a move that is bound to favor SoFi since it will expand the market and increase the accompanying loan outflow.
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