Why Is SoFi (SOFI) Stock Down Again Today?

SoFi (NASDAQ:SOFI) stock is falling 9% in early trading after President Joe Biden extended the suspension of student loan payments yesterday, causing SoFi to cut its guidance.

SoFi logo at their headquarters location. SOFI stock.
Source: Michael Vi / Shutterstock

So what do you need to know?

Biden announced in a statement that he would extend the moratorium until Aug. 31. He explained that, if the suspension expired, “millions of student loan borrowers would face significant economic hardship, and delinquencies and defaults could threaten Americans’ financial stability.”

SoFi, which provides loans to students, responded to the news by reducing its 2022 revenue estimate.  Excluding certain items, it has lowered guidance to $1.47 billion from $1.57 billion. The company cut its EBITDA guidance, excluding certain items, to $100 million from $180 million.

“[O]ur student loan refinancing business has operated at less than 50% of pre-COVID levels for the last two years,” said SoFi CEO Anthony Noto in a filing.

What Do Analysts Think About SOFI Stock?

The company said it expects the suspension of student loan payments to be extended “beyond August 2022,” partly due to Congressional elections slated to be held in November 2022.

A number of research firms responded negatively to the news, with Wedbush cutting its price target on SOFI stock to $15 from $20, Mizuho lowering its price target to $14 from $17, and Oppenheimer slashing it target to $13 from $18.

On March 16, Morgan Stanley, predicting that the student loan moratorium would be extended, lowered its rating on SOFI stock to “equal weight” from “overweight.” Noting that SoFi refinances student loans, the firm wrote that the suspension eliminates borrowers’ need to refinance. Further, the firm was bearish on SoFi’s home loan business. It cut its price on SOFI stock to $10 from $18.

On the date of publication, Larry Ramer 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.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been GE, solar stocks, and Snap. You can reach him on StockTwits at @larryramer.


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