SoFi Technologies (SOFI) is a shining star, ranked #1 (Strong Buy) by Zack. Acting as a financial services luminary, SoFi empowers its members to borrow, save, spend, invest, and safeguard their finances.
Since the last earnings report in late July, the stock’s trajectory has been nothing short of meteoric. If this earnings momentum persists, the stock is poised to continue its upward journey.
Analysts are revising their estimates across the board, making this stock a tantalizing prospect for investors on any price retracement.
A Deep Dive into SoFi Technologies
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SoFi, born in 2011 and calling San Francisco, California its home, flaunts a hefty $8.5 billion valuation and a workforce of 4,400.
Operating through three divisions: Lending, Technology Platform, and Financial Services, SoFi specializes in personal, student, and home loans along with an array of related services.
The company controls Galileo, a tech platform catering to financial and non-financial entities, as well as Technisys, a cloud-native banking platform. SoFi also offers SoFi Money for checking, savings, and cash management, and SoFi Invest for trading and robo-advisory solutions.
Sporting a Zacks Style Score of “A” in Momentum and “C” in Growth, SoFi falters in the Value department, with a Forward PE exceeding 80.
Q2 Earnings in Focus
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In the latter part of July, SoFi outperformed with a 1 cent EPS surplus and revenue exceeding expectations. The company upped the ante by raising Q3 earnings and revenue outlooks, with adjusted EBITDA projected at $160-165M.
SoFi also revised its FY24 revenue forecasts, FY24 adj EBITDA, and FY24 GAAP Net income estimates.
The membership base has surged to 8.77M from 4.32M a year ago, underscoring impressive year-over-year customer growth.
Management attributed the robust Q2 to innovative products and a burgeoning member count. Their holistic strategy continues to propel growth across segments, defying macroeconomic hurdles. Financial Services and Tech Platform divisions now constitute 45% of adjusted net revenue, up from 38% the prior year, showcasing a remarkable 46% year-on-year increase. SoFi envisions its Tech Platform evolving into the “AWS of financial services” and stands ready to reap the benefits once the lending landscape brightens.
Rising Estimates: A Positive Sign
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Post-earnings revelation, analysts have been upping their earnings projections and price targets.
Current quarter estimates have surged from $0.03 to $0.4 post-EPS, indicating a hefty 33% rise.
For the ongoing fiscal year, the past 60 days witnessed an escalation from $0.08 to $0.10, reflecting a solid 25% increase.
Looking ahead to next year, estimates have gradually climbed over the last 90 days. Analysts now project $0.27 compared to $0.24, marking an 11% leap.
SoFi Technologies, Inc. Price and Consensus
SoFi Technologies, Inc. price-consensus-chart | SoFi Technologies, Inc. Quote
The stock has scaled nearly 20% since the earnings release, but some analysts believe there is more room for growth. Following the earnings, Needham analyst Kyle Peterson reiterated a Buy rating on SoFi, maintaining a price target of $10.
Recent appearances at a Goldman Sachs conference saw SoFi anticipating heightened demand for student loan refinancing. CEO Anthony Noto emphasized that increased marketing expenditure equates to expanded growth opportunities.
These remarks underscore the company’s positive outlook on augmented business activity with declining interest rates.
A Technical Examination
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At its IPO tail end in late 2020, SoFi commanded a $28 price tag, necessitating a concerted effort by the bulls to reclaim previous highs. Despite this, the stock is teetering on the cusp of breaching 2024 peaks. Notwithstanding, bearish sentiment is evident, with the stock stalling at the $8.50 level.
Potential buyers eyeing a price dip should monitor the following support levels:
The 200-day moving average rests at $7.55.
The 21-day MA hovers at $7.70.
The 50-day average stands at $7.35.
A noteworthy development to track is a potential “Golden Cross,” anticipated when the 50-day surpasses the 200-day MA, beckoning fresh buyers to the scene.
In Conclusion
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SoFi Technologies dazzles with robust growth in key sectors, fuelled by innovation and an expanding clientele.
The recent Q2 earnings triumph signals a promising path ahead for this financial powerhouse.
Seizing Opportunities in Student Loan Market
SoFi, the finance company leading the charge in student loan refinancing, has seen a surge in its stocks following a robust performance exceeding analyst expectations in FY24. With management raising guidance, the company is set to navigate the choppy waters with finesse. The soaring demand in student loan refinancing coupled with increasing analyst estimates paints a promising picture for SoFi’s future.
Capturing Market Potential for Growth
While the stock has already shown a significant uptick of close to 20% post-earnings report, there remains potential for further growth. Technical indicators, such as the possibility of a “Golden Cross,” pose as lucrative bait for attracting new investors. SoFi stands well-positioned to capitalize on the current market conditions, potentially propelling its stocks to greater heights.
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