The stock is up nearly 37% this year and has a market cap of over $14.3 billion. A big part of SoFi’s business is growing its student and personal portfolios to drive more net interest income, and also selling loans to investors. Lower interest rates should help this aspect of the company because lower interest rates will lower deposit costs over time and bring more investors back into the market, which gives SoFi more capacity to originate and sell loans. The incoming administration of President-elect Donald Trump may also be good for SoFi’s student loan business, which struggled during President Joe Biden’s administration due to a years-long student loan moratorium and uncertainty around Biden trying to push through student loan forgiveness. Lower interest rates could also help quell investor concerns over credit quality.

Additionally, SoFi’s tech business may benefit from banks finally gaining visibility into regulatory capital rules. One part of SoFi’s tech business involves selling cloud-based core-processing banking technology that helps banks power their daily banking activities. Pushing these sales through can take a long time. I’m guessing many bank boards have had their hands full managing their balance sheets through the high interest rate environment and preparing for higher regulatory capital rules. A more conducive environment for banks may allow them to pull the trigger on some of their new initiatives including these deals.

Wall Street analysts expect SoFi to generate $0.28 of diluted earnings per share, up from a projected $0.13 this year, suggesting a 115% upside next year. The low estimate is $0.22 and the high estimate is $0.35. The trajectory of interest rates will be important for SoFi, with more rate cuts being more beneficial.

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.

SoFi Stock vs. Palantir Stock: Wall Street Expects Earnings to Soar 48% for One and 115% for the Other in 2025 was originally published by The Motley Fool