SoFi's 2026 Margin Outlook Reinforces Growth Narrative but Highlights Underlying Risks

What happened

Zacks Investment Research reports SoFi targets mid-30% EBITDA margins in 2026 with 30% revenue growth, framing it as a shift to a scaled, profit-driven operator. This aligns with the DeepValue report's base case of sustained profitability, where Q4 2025 delivered record $1.0B revenue and a 31% adjusted EBITDA margin. However, the report critically notes that SoFi's profitability relies on non-GAAP adjustments and faces material risks, such as a 23% year-over-year drop in Technology Platform enabled accounts due to client concentration. Additionally, two $1.5B equity offerings in 2025 underscore ongoing dilution concerns that could impede per-share compounding. Investors must scrutinize whether margin expansion can hold against potential credit normalization and funding dependencies highlighted in filings.

Implication

The projected margin expansion depends on achieving 30% revenue growth, which is vulnerable to headwinds like Technology Platform churn and consumer credit cycles. SoFi's history of equity offerings in 2025 signals dilution remains a live tool, potentially eroding per-share value if repeated. Fee-based revenue must exceed $450M in upcoming quarters to validate the capital-light scaling story and offset balance-sheet intensity. Credit normalization in personal loans could increase charge-offs, squeezing margins and challenging the profitability outlook. Overall, while the outlook is optimistic, it requires close monitoring of execution risks and market sensitivity to dilution before upgrading conviction.

Thesis delta

The news confirms management's confidence in margin expansion, supporting the base case valuation of $24 and the potential for operating leverage. However, it does not mitigate key thesis risks, such as further equity issuance or Technology Platform volatility, which could trigger a bear case. Thus, the investment thesis remains unchanged, emphasizing the need for sustained fee revenue growth and no additional dilution to justify a higher rating.