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SOFI Stock Pops 7% Ahead of Earnings


  • SoFi Technologies (SOFI) stock is popping significantly higher on Thursday.
  • This move comes on little news aside from anticipation for the company’s upcoming earnings report.
  • SOFI stock may also benefit from clarity regarding the broader student loan issue.
The Social Finance (SoFi) logo is seen on a smartphone and a pc screen
Source: rafapress / Shutterstock.com

Fintech specialist SoFi Technologies (NASDAQ:SOFI) is swinging dramatically higher on Thursday on little company-specific news. Interestingly, SOFI stock – which is popping up 7% right now – is benefiting from broader positivity in the market. Anticipation for SoFi’s upcoming earnings report and clarity on the student loan issue appears to invigorating sentiment as well.

First off, SoFi Technologies is on tap to report its first quarter of 2023 earnings results on May 1. According to Zacks Equity Research, the company features an impressive earnings surprise history, beating estimates for the trailing four quarters. On average, SoFi delivered an earnings surprise of 13.6%.

For Q1, analysts expect revenue to hit $441.7 million, representing a 33.7% year-over-year (YOY) lift. Per Zacks, the top line is “likely to have benefited from the national bank license obtained by the company and the provision of SoFi Money products.”

On the bottom line, analysts anticipate Q1 to incur a loss of 8 cents per share. In the year-ago quarter, SoFi printed a loss of 14 cents. Therefore, the targeted improvement in the earnings picture may be bolstering SOFI stock.

However, Zacks still states that its financial model “does not conclusively predict an earnings beat for SOFI this time around.”

SOFI Stock to Possibly Move on Student Loan Clarity

Another factor that appears to be undergirding SOFI stock today centers on interpretations regarding student loans. On paper, circumstances don’t look great. According to Yahoo Finance, the U.S. Department of Education recently sounded the alarm about the potential fallout from the House Republican debt ceiling plan.

Per the DOE, the debt ceiling plan would reverse President Joe Biden’s student loan forgiveness for up to $20,000 “even if the Supreme Court rules in favor of its legality.” The plan would also eliminate the forwarding of a more affordable student loan payment plan, according to Yahoo Finance.

Secretary of Education Miguel Cardona said in a statement:

“Speaker [Kevin] McCarthy declared that he will force a catastrophic default and plunge America into recession unless he can claw back school relief dollars and prevent millions of hard-working Americans from getting the student debt relief they need coming out of the pandemic.”

While a U.S. debt default would likely not be conducive for SOFI stock or any other business enterprise, investors may be anticipating that some kind of deal may go through, especially given the sharp consequences at hand. Therefore, whatever that deal may be, it should provide clarity on the student loan crisis.

Moving forward, SoFi management can establish baseline financial targets, thereby hopefully creating more predictability for stakeholders.

Why It Matters

At the moment, Wall Street analysts remain generally optimistic about SOFI stock, pegging it a consensus “moderate buy” rating. The overall assessment breaks down to eight buys, three holds and no sell ratings. Additionally, analysts have an average price target of $8.20 per share, implying around 35% upside potential.

On the date of publication, Josh Enomoto did not hold (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.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

Article printed from InvestorPlace Media, https://investorplace.com/2023/04/sofi-stock-pops-7-ahead-of-earnings/.

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