SoFi stock will rise over the next 5 years. Here is 1 reason why.

The stock of SoFi technologies (NASDAQ: SOFI) it was crushed this year after doubling last year. It’s down 20% year-to-date despite what looks to be a pretty solid performance.

However, the tide could turn soon. Let’s see why SoFi stock could soar over the next five years.

Expanded business, lower interest rates

SoFi’s main business is lending, but it has expanded into a wide range of financial services, such as bank accounts and investments. Offering other services provides more benefits to SoFi.

It gives it new revenue streams, creates greater cross-platform engagement among current members, can attract new members, and — what stands out now — is that it protects the business from the effects of changing interest rates.

Lending can be a profitable business, but it is very sensitive to interest rates, and SoFi’s lending segment has been under pressure as rates remain high.

Now that interest rates appear to be starting to fall, the pressure should start to ease. Meanwhile, the other segments are still in growth mode and continue to represent a larger percentage of the company’s total business.

The lending segment continues to grow, but the non-lending segments are growing much faster. They accounted for 45% of business in the second quarter of 2024, up from 38% a year ago. As the other segments outpace lending growth, SoFi will become a more stable business with less exposure to interest rate movement.

If the lending segment grows at lower rates, as the segment is doing, current investor concerns about the business will disappear. When you combine that with the strength of the company’s expansion model, SoFi stock could explode over the next five years, and now could be a great time to buy.

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Jennifer Saibil holds positions in SoFi Technologies. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Prediction: SoFi stock will rise over the next 5 years. Here is 1 reason why. was originally published by The Motley Fool