- SoFi Technologies (SOFI) has an impressive balance sheet.
- The company’s shares have suffered more than expected following mixed earnings.
- SOFI stock is trading at a discount and is therefore a buy.
Fintech company SoFi Technologies (NASDAQ: SOFI) is here to disrupt the industry and it is managing to doing so. The company has suffered from a few headwinds lately, but there is so much to look forward to in SOFI stock.
The company’s shares are being punished more than they deserves, and SoFi certainly has the ability to transform the industry. The stock is trading at $7 today — much lower than its all-time high of $25, but I think the dip is a buying opportunity. Let’s dig deeper into why I am bullish on SOFI stock.
| SOFI | SoFi Technologies | $7.34 |
SoFi Has Strong Fundamentals
Investors have a reaction to every piece of news, and despite positive results, they weren’t happy with SoFi. The company announced impressive first-quarter earnings, with revenue hitting $322 million and beating consensus estimates. This was a 49% rise year-over-year (YOY). Meanwhile, its EBITDA stood at $9 million, positive for the seventh straight quarter. Further, earnings per share stood at a loss of 14 cents.
Impressively, it added 408,000 new members and its total members at the end of the quarter rose 70% YOY to 3.9 million. SoFi reported the third-highest member growth this quarter despite concerns about the federal student loan payments moratorium.
SoFi saw the most significant improvement in its financial services segment, followed by its technology platform and lastly, its lending products. If the company can manage to reduce its dependence on loans, it will drive higher revenue numbers.
However, the second-quarter guidance wasn’t as high as expected, which it led to SOFI stock sinking. Management guided for revenue between $330 million and $340 million.
I think the market is overreacting and the stock doesn’t deserve to suffer. If investors are looking for fundamentals, SoFi has it sorted.
The Bottom Line on SOFI Stock
SOFI stock recently got an upgrade from Piper Sandler analyst Kevin Barker. He stated the market has been over-discounting SOFI stock, and that he sees room for the company to deliver stronger earnings before interest, tax, depreciation and amortization (EBITDA).
Barker is optimistic about the second half of the year and believes the company could continue its strong trajectory through 2023. The analyst has an “overweight” rating for the stock with a target price of $12. In fact, SoFi CEO Anthony Noto bought 39,000 shares of the company recently, taking his total holding to 3.2 million shares.
I believe the current dip is a golden opportunity to take a position in SOFI stock. The company has tremendous potential, and the pace at which it is growing is nothing but impressive. Buy SOFI stock and hold for the long term.
On the date of publication, Vandita Jadeja 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.
