After the close of the markets on Aug. 12, stakeholders of SoFi Technologies (NASDAQ:SOFI) were undoubtedly on edge. Would the company’s quarterly data release be positive or negative, and how will this impact SOFI stock?
The immediate reaction, at least according to the after-hours movement of the share price, wasn’t mirthful.
Just a half-hour after the markets closed and minutes after the data release, SOFI stock was down 13%. Clearly, the post-market traders didn’t like what they saw.
This is fresh and exciting news, so I’ll dish the dirt and provide all of the essential details. Along the way, hopefully we’ll be able to determine whether the market’s initial response was sensible – just maybe, there’s dip-buying opportunity here.
A Closer Look at SOFI Stock
SoFi, which stands for social finance, went public on June 1 after reverse-merging on May 28 with Social Capital Hedosophia Holdings V, a now-nonexistent shell company founded by special purpose acquisition company (SPAC) investor Chamath Palihapitiya.
At that time, SoFi had around 2.3 million members. Furthermore, the company had recently reported its first-quarter fiscal results, which were outstanding and included adjusted net revenues of $216 million.
Hence, the expectations surrounding SOFI stock were rather high. Probably as a result of this, the share price leaped by 12% during the stock’s first day of trading on the Nasdaq Exchange.
The momentum continued but only briefly. The stock peaked on June 8 near $24, but it was all downhill from there.
Fast-forward to Aug. 12, and SOFI stock finished the regular-hours trading day at $17.46. After the company’s second-quarter earnings announcement, however, the share price dropped like a rock.
The CEO Sees It Differently
Apparently, there’s a major discrepancy between the after-hours market’s immediate response to SoFi’s earnings data, and that of the company’s CEO, Anthony Noto.
Judging by Noto’s words, he seems pleased and perhaps even ecstatic. “The second quarter proved to be another quarter full of milestones for SoFi,” he said.
If the CEO is brimming with confidence, frankly, I can’t blame him. After all, Noto’s got plenty of data to back up his positive attitide.
First of all, Noto observed that his company exceeded its financial expectations, “delivering record adjusted quarterly net revenue and our fourth consecutive quarter of positive adjusted EBITDA.”
To provide some numerical figures, SoFi recorded net quarterly revenue, on an adjusted basis, of $237.2 million. That represents a record high for the company, and it’s year-over-year improvement of 74%.
Meanwhile, SoFi posted adjusted EBITDA of $11.2 million. That’s the fourth consecutive quarter of positive adjusted EBITDA, and $35 million higher than the year-ago quarter’s figure.
More Ammo for the Bulls
Those stats not enough for you? No problem – there’s plenty more where that came from.
For 2021’s second quarter, SoFi reported total year-over-year member growth of 113%. After eight consecutive quarters of acceleration, the member total is now up to 2.6 million.
But wait, there’s more. During this same quarter, SoFi reported a total products count of 3.7 million. On a year-over-year basis, that represents an increase of 123%.
There’s ammo for the bull thesis here, no doubt about it.
On top of all that, Noto mentioned that SoFi increased its Galileo account base to nearly 79 million, “and raised nearly $2 billion in our successful transition to a public company.”
So, what’s up with the after-hours share dumpage? Are the people not satisfied with these numbers?
The markets can be nit-picky, and hard to satisfy. Expectations can run high, especially with a high-conviction fintech firm like SoFi.
The Bottom Line
All in all, there appears to be a mismatch between SoFi’s milestone-marking quarter and the market’s initial response.
Value seekers should be fine with this. If anything, it’s an opportunity to pick up some shares at an even better price point.
We’ve proven it today – there’s no shortage of data to support higher prices in SOFI stock, sooner or later.
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.