KBW downgraded SoFi from neutral to underperform and raised their price target from $7 to $8. The main reason for the negativity is something I candidly find erroneous at this point… sort of like the boy who cried wolf without there ever actually being a wolf there. It’s a very similar note to the one KBW sent out last January, before SoFi aggressively rallied and doubled throughout the year.

The KBW analyst doesn’t believe in SoFi’s 2026 targets and thinks it will fall short of multi-year guidance. It also thinks that investor optimism has more to do with who was elected president instead of how good SoFi’s results have been and how sharply hawkish policy has flipped dovish. I don’t agree at all. KBW has never been a believer in SoFi as a company and searches for reasons to denigrate the business case as it continues to perform and the stock marches higher. Still, they’re entitled to their opinions and it’s always valuable to understand where they’re coming from. In this case, I just don’t find their views compelling and here I’ll explain why that is. 

Let’s revisit for a moment what is actually included in SoFi’s 2026 guidance. The 2026 estimates were set at the beginning of 2024 and do not rely on an ounce of macro improvement. They simply assumed that terrible macro wouldn’t get any worse. In reality, the environment has already brightened. Rate cuts that leadership was loudly rooting for have come. These feed SoFi’s ability to confidently originate loans for its own balance sheet while improving capital market liquidity and allowing it to sell larger pools of loans to eager buyers. This dynamic meaningfully bolsters SoFi’s ability to service demand within its largest, most profitable segment, which should mean upside vs. its $0.67 2026 EPS target if anything.

Next, consider who is setting these expectations. SoFi’s leadership team has delivered on their promises time and time again amid headwinds that would have led to others shriveling up and dying. Want to shutter its student loan business overnight? Want to vastly worsen the environment for software buying? Want to hike rates like mad-men and effectively halt capital market loan demand? No problem… promises made… promises kept. It’s useful to ask ourselves why it would be able to meet all forecasts within a wildly difficult backdrop, but now suddenly won’t as things get much easier. That argument makes no sense.

This team is fixated on doing what it says it will do and consistently providing results above expectations. Do we really think it wouldn’t take an identically conservative approach when modeling out 3 years instead of 1 year? I don’t. I think they were likely even more pessimistic with assumptions, as any rational team would be when looking further into the future. That’s why they assumed all new products, including its ramping credit card and its successful loan platform expansion, would contribute $0 to 2026 results. Finally, is it realistic to conclude that a fair value loan marking drag would suddenly prevent SoFi from reaching its goals amid rate cuts when that didn’t happen amid hikes? Despite fair value markings assuming a macro backdrop that is far worse than reality, despite SoFi’s strict delinquent loan write-down policy, and despite those markings being completed by a 3rd party auditor? No, of course not.

I believe that the KBW analyst just likes saying the words “fair value.” They’ll scream about existential risks, despite multiple cycles proving how irrelevant of an issue this is. We have concrete data depicting how easily SoFi can wind down premium when need be while still meeting targets, but this firm doesn’t seem to care. KBW is even reporting “adjusted capital ratios” that exclude fair value premium to create a perceived risk of more capital raises. But? There’s zero reason to make this adjustment to GAAP disclosures and leadership has explicitly said no capital raises are coming.

Asking all of these questions makes it apparent why I don’t take KBW’s consistently negative coverage of this name seriously. To their credit, they do acknowledge that there are near-term tailwinds that create significant risk to their rating… but I think they’ll eventually learn it isn’t just short-term risks… but medium and long-term too. More noise for me to tune out and a great reason to justify SoFi cooling off today after racing 50% above its 200-day moving average. With all of this said, the stock is still up nearly 100% in 3 months, and I have zero interest in selling a single share. The bull case is firmly intact. If it were not already a massive position, I would have likely added.