SoFi’s (NASDAQ:SOFI) losing streak continues even after a mostly positive earnings report. The personal finance startup has struggled since the initial Covid-19 outbreak led to a moratorium on student loan payments. With the federal payment pauses continuing into 2022, the company has faced a difficult landscape. Now SOFI stock is dealing with further losses after releasing its Q1 earnings report early.
What’s Happening With SOFI Stock
SoFi intended to release its Q1 earnings report after markets closed today. Due to what the company describes as “human error,” however, it released the results earlier this morning. SOFI stock plunged quickly before facing a trading halt for three hours.
Although shares rebounded some from their pre-halt loss of 18%, SoFi closed out the day down 12%.
Let’s take a closer look at the day’s events and what they mean for the future of SoFi.
Why It Matters
For the most part, the earnings report revealed good numbers. The company posted quarterly revenue of $322 million, beating Wall Street’s prediction of $286 million. It reported a loss per share of 14 cents, beating expectations by 1 cent.
However, its guidance for the second quarter is less promising. The reported revenue range of $330 million to $340 million came in below the analyst prediction of $343.7 million.
SOFI stock has shed more than 70% over the past six months. As InvestorPlace Financial News Writer Eddie Pan notes though, “first-quarter revenue exceeded the company’s guidance of $280 million to $285 million by 13% at the high end. Q1 EBITDA (earnings before interest, taxes, depreciation, and amortization) also exceeded guidance of $0 to $5 million by 74% at the high end. That’s a big deal.”
Indeed it is. With many factors working against it, the company still reported mostly positive earnings. These industry headwinds haven’t changed the bullish SOFI stock thesis of experts such as InvestorPlace analyst Luke Lango. It’s also worth noting that the company has done its best to level-set expectations for the difficult quarter ahead:
“As a reminder, SoFi issued a press release following the most recent extension in April announcing Management’s expectation that a number of factors, including the impending fall midterm elections, are likely to precipitate a seventh extension beyond August 2022, and therefore the company’s adjusted full year financial guidance assumes that the student loan moratorium will not in fact end during the course of 2022.”
What It Means
As negative as SOFI performance has been lately, plenty of experts see these declines as an opportunity to buy the dip. InvestorPlace contributor Chris Tyler sees the stock more than doubling throughout the year, going as high as $14.41 per share. “Much of SoFi’s bearish condemnation has been the outfit’s moratorium risk tied to its Federal student loan portfolio,” he wrote. “But at this point, critics of SOFI and the stock’s 16% bearish short interest may be looking at the trees rather than the forest.”
Investors shouldn’t be spooked by the earnings report being posted early, nor by what it revealed. The weak guidance was expected and most other metrics were positive. SOFI stock still has the type of potential that Lango and Tyler have been touting for months.
On the date of publication, Samuel O’Brient did not hold any position (either directly or indirectly) 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.
