SoFi's Galileo Growth Confirmed but Core Financial Risks Unchanged

What happened

A recent Zacks article highlights SoFi's Galileo platform as driving steady revenue growth by powering millions of accounts through its API-first stack. The DeepValue report corroborates this, noting Galileo enabled 168 million client accounts in 2024 and supports the Technology Platform segment, which grew 12% year-over-year in Q3 2025. SoFi has achieved GAAP profitability with robust operational metrics, including over 30% annual growth in members and revenue. However, the report emphasizes that growth remains balance-sheet intensive, with volatile free cash flow, material credit losses in lending, and weak interest coverage. Thus, while Galileo's performance is positive, it does not address the underlying financial vulnerabilities that sustain a cautious investment outlook.

Implication

The article reinforces SoFi's strategic strength in fintech infrastructure, potentially supporting long-term valuation if Galileo's growth persists and diversifies revenue. However, the DeepValue report shows that SoFi's earnings are not yet cash-backed, with negative operating cash flow in 2024 and high credit losses, indicating liquidity and solvency concerns. At a ~48x P/E after a 62% stock run-up, the valuation embeds aggressive growth assumptions that leave little margin for error amid funding and regulatory risks. Key monitoring points include sustained positive free cash flow, credit quality trends in unsecured loans, and deposit trajectory to assess de-risking. Without tangible improvements in these areas, the investment case remains weak, advising patience over new positions.

Thesis delta

The article provides no new material information, merely echoing the growth narrative around Galileo already documented in SoFi's filings and the DeepValue report. It does not mitigate the core thesis risks of volatile cash flow, credit exposure, and high valuation, which keep the 'WAIT' rating intact. Investors should await clearer evidence of sustainable financial health before reconsidering the investment stance.