SoFi Technologies (SOFI) is a Zack Rank #1 (Strong Buy) that is a financial services company. SoFi offers lending and financial services products that allow its members to borrow, save, spend, invest, and protect money.
The stock has been trending higher since last reporting earnings in late July. If the earning momentum can continue, the stock should follow suit.
With analyst hiking estimates across the board, investors should be eyeing this name on any pullback.
About the Company
SoFi was founded in 2011 and is headquartered in San Francisco, California. The stock is valued at $8.5 billion, and the company employs 4,400.
SoFi operates through three segments: Lending, Technology Platform, and Financial Services. It offers personal, student, and home loans, and related services.
The company also runs Galileo, a technology platform serving financial and non-financial institutions, and Technisys, a cloud-native banking platform. Additionally, it provides SoFi Money for checking, savings, and cash management, and SoFi Invest for trading and robo-advisory solutions.
The stock has a Zacks Style Score of “A” in Momentum, and “C” in Growth. However, the stock has a “F” in Value, with a Forward PE over 80.
Q2 Earnings
In late July, SoFi reported a 1 cent EPS beat and beat revenue expectations. The company guided Q3 earnings and revenues higher and sees adjusted EBITDA at $160-165M.
Moreover, SoFi raised expectations for FY24 revenues, FY24 adj EBITDA and FY24 GAAP Net income.
Total members are now at 8.77M v 4.32M a year ago, showing rapid annual growth in customers.
Management highlighted a strong Q2, attributing success to product innovation and member growth. Their one-stop shop strategy is driving growth across segments, despite macroeconomic challenges. Financial Services and Tech Platform segments now represent 45% of adjusted net revenue, up from 38% a year ago, growing 46% year-over-year. The company sees its Tech Platform evolving into the “AWS of financial services” and is well-positioned to capitalize once the lending environment improves.
Estimates Crawling Higher
Since reporting earnings, analysts have been lifting their earnings estimates and price targets.
For the current quarter, estimates went from $0.03 to $0.4 since EPS, or 33% higher.
For the current year, the last 60 days has seen a move higher from $0.08, to $0.10, or 25%.
For next year, estimates have slowly been raised over the last 90 days. Analysts now see $0.27 v $0.24, a jump of 11%.
SoFi Technologies, Inc. Price and Consensus
SoFi Technologies, Inc. Price and Consensus
SoFi Technologies, Inc. price-consensus-chart | SoFi Technologies, Inc. Quote
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The stock is up almost 20% since reporting earnings, but some analysts think there is more room. After earnings, Needham analyst Kyle Peterson reiterated SoFi with a Buy and maintained the $10 price target.
More recently, SoFi presented at a Goldman Sach conference. CEO Anothony Noto commented that they anticipate more student loan refinancing demand and the more they spend on marketing, the more they grow.
These comments reiterate that the lower interest rates go the more demand and business the company will see.
The Technical Take
This was a $28 stock after its IPO in late 2020, so the bulls have some work to do to get back to all-time highs. In the meantime, the stock is on the verge of breaking out to 2024 highs. However, sellers are showing up as the stock has seen some resistance in the $8.50 level.
Investors looking to target a pullback to buy should look at the following support areas:
The 200-day moving average is at $7.55.
The 21-day MA is $7.70.
The 50-day is $7.35.
One thing to watch out for is a potential “Golden Cross.” This would trigger when the 50-day gets over the 200-day MA and could bring in some fresh buyers into the stock.
In Summary
SoFi Technologies is showing strong growth across its key segments, driven by innovation, and expanding customer base.
The company’s recent Q2 earnings beat expectations, and management has raised guidance for the remainder of FY24. With rising analyst estimates and increased demand expected in the student loan refinancing space, SoFi is well-positioned to capitalize on improving market conditions.
While the stock has gained nearly 20% since its earnings report, there may be more room for upside, especially if technical indicators, like a potential “Golden Cross,” attract new buyers.
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