Loop Capital Starts SoFi Coverage With Hold Rating, $22 Target

Loop Capital initiated coverage of SoFi Technologies Inc. (NASDAQ:SOFI) with a Hold rating and a $22.00 price target, pointing to near-term sentiment headwinds from interest rate risks and a shift toward asset-intensive lending.

"Interest rate hike risks and a mix shift toward more asset-intensive lending will continue to weigh on stock sentiment near-term," said Reginald Smith, analyst at Loop Capital, in a note on the coverage initiation.

Asset-Intensive Lending Headwinds

The cautious rating from Loop Capital reflects ongoing debates among market analysts regarding SoFi's balance sheet strategy. While the company has historically leaned toward a capital-light business model by originating loans and selling them quickly to third-party buyers, shifts toward holding more loans on balance sheet increase capital requirements and interest rate exposure.

Financial institutions holding larger portfolios of loans face greater sensitivity to fluctuations in benchmark federal funds rates. When borrowing costs remain elevated or volatile, asset-intensive models can experience compressed net interest margins and higher provisioning for potential credit losses compared to purely fee-based platforms.

Longer-Term Growth Projections

Despite the near-term valuation and sentiment constraints, the investment firm holds a favorable view of the company's multi-year financial expansion. Loop Capital projects low to mid-20% compounded revenue and EBITDA growth for SoFi across fiscal years 2027 and 2028, according to data from Investing.com.

These projections follow a quarterly performance for the digital financial services platform. In its second-quarter financial report, SoFi reported adjusted earnings of $0.12 per share on revenue of $1.2 billion, outperforming Wall Street consensus estimates of $0.11 per share and $1.11 billion in revenue.

What Is at Stake for Digital Banking

The initiation highlights the valuation tension facing fintech lenders that have transitioned into federally chartered bank holding companies. As these firms scale their lending operations alongside traditional deposit-gathering accounts, analysts are weighing short-term macroeconomic vulnerabilities against longer-term structural growth trajectories.