Shares of SoFi Technologies (SOFI -5.84%) leaped higher when the market opened on Tuesday, April 29, and ended the day in positive territory. Investors responded well to a first-quarter earnings report that contained plenty of positives. By 2:30 p.m. Wednesday, April 30, the stock was down 6%.

In the first quarter of 2025, SoFi Technologies broke several records regarding its key performance indicators. Despite a highly positive performance, the stock finished April 29 down 26.4% from a peak it reached in January.

Let's weigh recent positives against the challenges the company is facing to see if the stock could be a smart buy on the dip.

Reasons to buy SoFi Technologies stock now

SoFi members can access mortgages, retirement accounts, personal loans, student loans, and a credit card using the same smartphone application that manages their checking account. A member-centric, one-stop shop for financial services is a big attraction for consumers who don't want to deal with multiple applications when handling everyday finances.

The number of folks with SoFi memberships at the end of March rose 34% year over year to 10.9 million. The number of financial products the bank manages rose at a slightly faster rate of 35% year over year to 15.9 million.

Originations of personal loans, student loans, and mortgages are soaring. Total lending product originations rose 66% year over year in the first quarter to $7.2 billion. With loan origination volume growing faster than overall membership, it seems like integrating lending products with financial services on the same smartphone application is working as intended.

In addition to increasingly popular financial services and lending products, SoFi owns the technology platform that underpins its operation. A diverse collection of financial technology businesses that include Toast, Dave, and Robinhood also run on SoFi's Galileo platform.

Positive first-quarter results encouraged SoFi to raise guidance. Now it's expecting adjusted net revenue to rise by 24% to 27% in 2025 and land in a range between $3.235 billion and $3.31 billion. On the bottom line, management expects to earn between $320 million and $330 million on a GAAP basis.

Reasons to remain cautious

SoFi bears like to remind investors that there's nothing new in consumer banking. Since banks are all the same, SoFi's rapid growth is due to unsustainable marketing incentives that will limit earnings growth. And it's easy to find numbers that support this bear argument.

After declining slightly for about a year, sales and marketing expenses are soaring again. In the first quarter, sales and marketing expenses shot up by 42% year over year to reach $238.2 million.

SOFI Sales and Marketing Expense (TTM) data by YCharts

In the first quarter, sales and marketing expenses worked out to 31% of total net revenue. For comparison, JPMorgan Chase recorded sales and marketing expenses over the past 12 months that were less than 3% of total revenue.

With sales and marketing expenses chewing up an outsize chunk of revenue, there isn't much left over for shareholders. As a result, SoFi expects earnings to decline significantly this year. At the midpoint of management's guided range, GAAP net income is expected to fall about 23.5% this year to $325 million.

Unfortunately, SoFi stock is priced for earnings growth, not the decline that management is forecasting. Its recent valuation of 2.95 times its tangible book value is relatively high and could come crashing down if the stock market doesn't see the earnings growth it's expecting.

Is the stock a buy now?

I expect heaps of new loan originations recorded in the first quarter of this year to lead to an interest-income boom that more than justifies the recent uptick in sales and marketing. To help fuel new loan originations in the quarters ahead, SoFi secured over $8 billion in new commitments from third parties.

A relatively high valuation and declining earnings will prevent me from adding to my SoFi position right now, but I have a higher aversion to risk than many investors. For folks with a relatively high risk tolerance, now could be a good time to begin a starter position.