SOFI Stock: The Big Reason Why SoFi Is Plunging Today

Not all fintech stocks have guaranteed gains attached. At least, that’s what SoFi Technologies (NASDAQ:SOFI) is proving today. SOFI stock is tanking in price as the company posts worse-than-expected earnings figures. And now, with the company’s stock lockup about to expire, one might expect these losses to continue for the foreseeable future.

the Social Finance (SoFi stock) logo is displayed on a smartphone.
Source: rafapress / Shutterstock.com

The company, which prioritizes mobile-friendly loan services, is popular for its student loan services in particular; young people make up a majority of the company’s target demographic. SOFI is a newly listed fintech play, having had its initial public offering (IPO) in early June. But while SoFi seems like a surefire hit, its latest earnings report is proving that to be wrong.

In its first earnings report since going public, SOFI missed the mark hard. But it’s not the revenue; in fact, the company’s revenue jumped up a significant 74% to $237.21 million in Q2. SoFi cites its new offerings as a big driver of this revenue increase.

Rather, the disappointment comes from the fact that even with this increase in revenue, the company still managed to post a net loss of $165.31 million. For reference, the company saw an income of $7.8 million in Q2 of last year. The company attributes the big losses to its acquisition of Galileo Financial, a $1.2 billion transaction that took place 16 months ago.

SOFI Stock Suffers as Holders Bail, Lockup Nears Its End

Holders might be rewarded in the future. Analysts are sticking to their guns on price points. Sean Horgan, analyst for Rosenblatt, is reaffirming his $30 price point and advises investors to buy SOFI stock. The analyst regards the current losses as short-term volatility. Meanwhile, other analysts continue to reaffirm the fintech player’s fundamentals.

This volatility may be short-term, but further immediate losses are quite likely. SoFi’s stock lockup comes to an end early next week, meaning a whole host of SOFI holders will be able to sell off their shares — something of high likelihood in this whiplash-inducing downfall.

The negative earnings report is pummeling SOFI today. The stock is down over 14%, and trading volume is ramping up. Over 53 million shares are trading hands against SOFI’s daily average of 13.6 million.

On the date of publication, Brenden Rearick 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.


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