My last story covering SoFi Technologies (NASDAQ:SOFI) was on Nov. 24. I suggested that investors should care little that Social Capital venture capitalist Chamath Palihapitiya was selling some of his SOFI stock. 

Since its publication, SOFI has lost almost 30% of its value. While I don’t have a problem taking the blame for the stock’s month-long decline, I think it’s fair to say that there’s more to the story than just one wealthy person’s stock sales.

So, what is it that keeps SOFI in freefall? Let’s consider the possibilities.

I Really Like SOFI Stock at $14

Ultimately, what drives stock prices are sales and earnings. SoFi has the former in spades. The latter will come with time. As I said at the end of November, the fintech disruptor’s Q3 2021 sales grew by 35.5%, while it finished the quarter with 2.9 million members, 96% higher than a year earlier.   

The downside to its third-quarter report was its $373.2 million loss for the first nine months of fiscal 2021, up from $161.3 million a year earlier. That’s going to happen when you’re scaling a business. Expenses were up across all four major line items: Technology and Product Development (up 46.3% YOY), Sales and Marketing (45.4%), Cost of Operations (49.2%), and General and Administrative (131.5%).

All four will likely remain elevated for the next 12-24 months. That’s life. Like all money-losing companies with potential, you mostly have to be concerned with management’s ability to execute its growth strategy. The profits will ultimately come.

Losing more money is only a concern if quarterly revenue slows both year-over-year and sequentially. In Q3 2021, it was up 35.5% YOY.

Pg. 19 of its third-quarter press release highlights the company’s metrics.

The first is members. They are people who have borrowed money from the company, opened a financial services account, linked an external account to its platform or signed up for its credit score monitoring service. 

Two years ago, it had less than a million members. Today, it’s close to three million and counting.  

Next up is total products. This represents the number of products a member has signed up for regardless of whether they still use the product. At the end of September, it was 4.27 million, or 1.45 products per member. Twenty-four months ago, it was 1.02 million, or 1.18 products per member. Its member engagement has increased by 23% over this time. 

If we break the numbers down further, lending-related products account for 24% while financial services — SoFi Money, SoFi Invest, SoFi Credit Card, SoFi At Work, and SoFi Relay — account for 76%.  

This is an excellent thing. 

Take Advantage of Investor Discontent

My InvestorPlace colleague, Josh Enomoto, recently threw ice-cold water on SOFI stock by suggesting that higher interest rates won’t have as positive an effect on profits as people think. 

That’s because, as interest rates rise, increasing loan revenues, so too do the lending costs that banks have to pay for their loan capital. As a result, the Federal Reserve Bank of St. Louis calls the effect of rising interest rates “ambiguous,” meaning banks don’t get nearly the boost expected. 

My colleague further argues that its lack of profitability only exacerbates the problem during deflationary periods. While he’s made excellent counterpoints, I believe that SoFi can meet the challenge. 

If nothing else, cryptocurrencies illustrate the level of discontent younger Americans have with traditional banks such as JPMorgan (NYSE:JPM) and Bank of America (NYSE:BAC). 

Businesses such as Square (NYSE:SQ) will continue to eat the traditional banks’ lunch if they ignore the needs of younger Americans. And for that matter, all Americans of every age group. I’m 57 (and Canadian, so I don’t count) and I’m not too fond of the big banks on both sides of the border. They are not your friend. 

“Our research showed that local and regional (traditional) banks have more work to do in improving their trustworthiness — and their products and services — if they are going to win over younger generations,” Shayli Lones, vice president of go-to-market at financial data platform MX, said to BankingDive. 

SoFi exists to eliminate the pain points that plague traditional banking. Whether or not cryptocurrencies will be a big deal to SoFi is immaterial. It’s what the customer wants. This shouldn’t be hard to comprehend. 

The Bottom Line

As financial services stocks go, I can count the number of companies I would stand behind on two hands. Square is one, SVB Financial (NASDAQ:SIVB) is another. And despite losing a boatload of money, SoFi Technologies is a third.

I liked SOFI stock at $18. Despite the naysayers, I like it even better at $14.    

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.