The digital bank SoFi ($SOFI) shared the first detailed look at its new crypto division. This report arrived as the company’s stock price dropped by more than 10% over the last five trading days, falling to $12.33. While the company successfully brought in $121.6 million in transaction revenue during the first quarter, almost the entire amount was needed to cover the business costs. After accounting for $120.7 million in expenses, the firm walked away with just $852,000 in net revenue from these digital asset trades.
SoFi Generates Slim Profits from Digital Trades
The bank explained that it records its crypto business on a gross basis. This happens because the company acts as a principal, meaning it buys and sells the assets directly before transferring them to the accounts of its customers.
Because of this business model, the high volume of money moving through the system leads to very large costs that nearly match the total revenue. Currently, the company says it has “239,509 crypto accounts” on its platform. This specific number includes every account that has ever been opened rather than just the people who are actively trading right now.
SoFi’s Platform Attracts Nearly 240,000 Users
Despite the low profit margins in the first quarter, the company continues to expand its reach. SoFi reported that its overall earnings rose to $0.12 per share, which is a significant increase from the year before. The bank is positioning itself as a middleman for digital trades, similar to a traditional brokerage.
This allows users to buy and sell coins without the bank having to take risks on which way the market moves.
SoFi Introduces New Stablecoin Solutions
SoFi introduced its own stablecoin, SoFiUSD, late last year to help businesses handle payments more easily.
To support this growth, the bank formed a partnership with Mastercard to help with future settlement tasks. However, new government rules are changing how the bank must run this part of the business. Due to the GENIUS Act, SoFi will eventually need to move its stablecoin operations to a “separately licensed or regulated entity.”
Is SoFi Stock a Good Buy?
Turning to TipRanks, SOFI stock has a Hold consensus rating based on seven Buys, nine Holds, and three Sells assigned in the last three months. At $21.41, the average 12-month SOFI stock price target implies a 30.8% upside potential.
