One of the most intriguing intraday movers today is SoFi Technologies (NASDAQ:SOFI). After reporting an earnings beat this morning before the bell, shares of SOFI stock initially opened higher. However, shares have since plunged by about 10%, even though the company announced results that beat estimates on the top and bottom lines.
More specifically, SoFi’s revenue of $460 million came in more than $20 million higher than the average analyst estimate. The loss of 5 cents per share was also significantly better than the 8 cent loss that was expected.
Investors are clearly taking these earnings with a grain of salt. That’s partly because they’re backward-looking and investors are assessing what future quarters will bring. SoFi’s full-year guidance raise, which was substantial, still didn’t factor in the outperformance seen in the first quarter. Thus, some investors believe that pain could be on the horizon.
Let’s dive into what to make of these numbers and why SOFI stock is down so much today.
SOFI Stock Sinks on Solid Earnings Beat
Generally speaking, companies that beat on the top and bottom lines and raise guidance tend to perform very well on a given day. But that’s not always the case. SOFI stock is exemplifying that today.
SoFi’s guidance raise to a range of $1.955 billion to $2.02 billion — up from $1.925 billion to $2 billion — was very slight. Investors may have expected the company to raise its guidance by a more substantial degree, considering the strength of earnings and the fact SoFi may expect future beats on the horizon. In essence, this guidance raise factors in no earnings beats on the horizon — something investors clearly want to see in order for SoFi to get back to its previous growth ways.
The company did report strong earnings, bolstered by a diversified business model (SoFi isn’t only a student loan play). That said, in order for SOFI stock to catch up to continued high expectations, investors are clearly demanding more. As a result, it’s difficult to assess shares at these levels.
