The stock market had a fairly gloomy start to the new year on Thursday, but SoFi Technologies (SOFI -8.25%) shares really took a hit. The fintech plummeted by more than 8% on the inaugural trading session of 2025, a far steeper fall than the 0.2% slide of the bellwether S&P 500 index. The news behind the decline was an analyst’s recommendation downgrade.

Knocked down to sell

The researcher behind the downgrade was Keefe, Bruyette & Woods’s Timothy Switzer. Well before market open, he changed his tag on SoFi stock to underperform (read: sell) from his previous market perform (hold). In doing so, he shaved his price target to $7 per share; previously, this stood at $8.

According to reports, Switzer’s latest take on SoFi is due to the bull run the fintech enjoyed in 2024; its price ended the year 57% higher. In his view, much of this was due to investor bullishness on high-growth fintech titles following the presidential election. On top of that, an improving macroeconomy combined with lower interest rates was also encouraging market players to buy the stock.

Yet the investor pile-in has left SoFi overvalued, the analyst wrote, even in the best-scenario case that management is successful at hitting its ambitious long-term targets.

Reasons to be cheerful

It’s certainly worthwhile to revisit a stock when its price changes so drastically over a relatively compressed period of time. Yes, SoFi looks overvalued in certain metrics, but the company’s fundamentals have looked rather promising of late, and it’s operating in what might turn out to be an environment of long-tail economic growth. I’m more bullish on SoFi’s prospects than Switzer, and I’d even consider it to be a buy candidate.