If you haven’t heard yet, SoFi Technologies (NASDAQ:SOFI) has had to cut its guidance. President Joe Biden’s administration’s decision to extend the moratorium on federal student loan payments on April 6 prompted the financial firm’s decision. Naturally, SOFI stock fell after the extension was announced.
The company was quick to issue its updated forecast on the same date. SoFi Technologies’ expectations are that the extension will result in approximately $80 million less of net revenue in 2022. It also predicts it will see a $100 million hit to its expected EBITDA.
The company went so far as to predict this latest extension of the student loan moratorium will not be the last. It anticipates the political ramifications of resuming student loan payments prior to the November midterms means yet another extension is likely. The company expects to see no resumption of payments on federally held student loans in 2022.
That is indeed a negative for the firm, whose shares have been trending down throughout 2022. That said, analysts aren’t so sure SOFI stock remains anything other than buy-worthy. Analysts at Mizuho Securities and Wedbush maintained their outlooks for the shares, but lowered target prices slightly.
I question their upbeat assumptions. SOFI is a growth stock relying on markets to forgive the fact that it continues to lose massive sums of money. Yes, SoFi Technologies did report record revenue for the fourth quarter and 2021. But why should the markets reward it, a growth stock, in an environment in which the Federal Reserve will continue to punish such equities?
SoFi Technologies’ net losses more than doubled in 2021, reaching $483.9 million. That number should stay down because the company doesn’t expect student loans to resume this year and the Fed is going to crank up interest rates through 2022.
None of that favors SOFI stock. In other words, don’t put much into those $14 and $15 target prices out of Mizuho and Wedbush. Those are unlikely to materialize this year.
On the date of publication, Alex Sirois 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.
