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SOFI Stock: A Wild Ride to the Top

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SOFI stock analysis - Giddy-Up! Why SOFI Stock Deserves to Go Higher.

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What will it take for investors to accept that SoFi Technologies (NASDAQ:SOFI) is a real, chartered bank and not just a fly-by-night operation? Today’s SOFI stock analysis will show that it ought to be above $10, at least, especially considering SoFi Technologies’ impressive financial results.

SoFi Technologies is shifting away from its lending business – not completely, but enough to make room for other revenue sources. It’s a smart move for SoFi Technologies to diversify its business operations, even if the stock market might not fully appreciate this quite yet.

SoFi Technologies Turns Profitable: A Long-Awaited Achievement

Maybe the last thing that investors needed, considering SoFi Technologies legitimate, was a profitable quarter. So, SoFi Technologies finally delivered one.

Here’s the scoop. In 2023’s fourth quarter, SoFi Technologies generated adjusted net revenue of $594.245 million, up 34% year over year and ahead of the $572 million that analysts had predicted. Moreover, SoFi Technologies swung from a net earnings loss in previous quarters to the company’s first-ever quarterly profit.

More specifically, SoFi Technologies earned 2 cents per share in Q4 2023. That’s not a huge profit, but it’s still a positive sign for the company. Besides, this result surpassed Wall Street’s call for a breakeven quarter.

Beyond that, Oppenheimer analyst Dominick Gabriele observed that SoFi Technologies’ margins look healthy:

“The fact that this quarter had a 30% margin is really kind of a long-term goal that they’ve already achieved in this quarter. And the guidance is obviously for continued 30% roughly margins here.”

However, Mizuho Securities analysts focused on the headline news of SoFi Technologies turning income-positive. They titled a note, “4Q: GAAP Profits Promised, GAAP Profits Delivered.”

The Evolution of SoFi Technologies: A Diversified Path Forward

SoFi Technologies is also changing, not abruptly but noticeably. Going forward, the company plans to diversify its business and reduce reliance on its lending operations, which might face challenges during tight lending conditions.

SoFi Technologies CEO Anthony Noto has made his stance clear on this topic:

“While there’s a lot of focus on the lending, people may have been focusing too much on that and these other two businesses and the benefits of the strategy are starting to come through.”

The “other two businesses” are SoFi Technologies’ financial-services business and a technology platform. Noto clarified, “We are slowing down the lending business given our outlook for the economy, the macroeconomic environment.”

That’s a prudent strategy, I believe. Noto proposed that SoFi Technologies will shift from its previous revenue model of “over 95% lending” to ending 2024 “with 50% of our revenue being from our technology platform and financial services segment, and 50% from lending” – a reasonable mix for a maturing fintech business, I’d say.

Outlook for SOFI Stock: A Promising Future

Obviously, my SOFI stock analysis is optimistic for 2024. I’m looking forward to SoFi Technologies’ shift to a more diversified revenue model. Investors need to be patient, as this shift won’t happen overnight.

Meanwhile, it’s encouraging to see SoFi Technologies swing to profitability. What else will it take to convince reluctant investors that SoFi is the real deal?

Maybe the market just needs some time to accept and appreciate what SoFi Technologies has to offer. It’s surprising that SOFI stock isn’t far above $10 right now. Hence, there’s still an opportunity for investors to take a share position in SoFi Technologies at an unreasonably reasonable price.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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