With solid financials, SoFi Technologies (NASDAQ:SOFI) stock has become one of the more reputable fintech players for long-term investors to consider in this market. Several bullish price targets are emerging for this stock, with analysts suggesting it should trade in double digits. With a current trading price of $9 per share, this stock has potential for significant growth in the coming years.
Folks increasingly are looking for non-traditional options to handle their banking needs, companies like SoFi that have diversified their business model to become an online bank have grown in interest among many investors. SoFi has move past being a student loan refinancing company to something much more. Here’s more on why I think this is a fintech stock investors ought to consider adding to their portfolio this year.
SOFI Stock and the Latest Earnings
SoFI Technologies surprised investors in Q4 2023 with its first profitable quarter. Adjusted net revenue exceeded predictions, pointing to a turnaround from earlier losses. The company outperformed Wall Street’s expectations, earning two cents per share.
With a 44% increase in customers and a 35% increase in revenue to $615 million, SoFi witnessed tremendous growth. Revenue from the company’s loan division increased, but the financial services segment led the way with a 115% increase in revenue, even with higher interest rates. Because of competitive savings rates and more excellent FDIC insurance, deposits skyrocketed by 150% to $18.6 billion despite the banking crisis.
Deposits make up a sizable amount of SoFi’s liabilities (76%), which gives management an upper hand. Deposits are usually stable as a low-cost capital source for financial lending activities. With bottom-line profitability of $48 million in Q4, it’s clear that the net interest margin picture is much more rosy than investors initially thought with this online bank.
More Growth to Come in 2024
SoFi has turned the heads of depositors looking for a better interest rate amid economic unrest. Its user-friendly interface, which puts students and young professionals on a pedestal, has led to significant growth.
By the end of the year, SoFi had 7.5 million accounts on its books, adding 585,000 from the previous quarter. This steady growth ensures the company will keep pumping out earnings beats in the coming quarters, and improve its fundamentals further.
Investors are increasingly giving SOFI stock the benefit of the doubt. Indeed, SoFi’s optimistic forward outlook is being digested in a positive light by the market. That’s something we haven’t seen in some time. And while revenue growth of 20%-25% to 2026 may seem aggressive, I think it’s totally achievable.
The company’s leadership team expects to earn 69 cents per share by 2026. This would value the stock at roughly 13-times forward earnings, if that’s the case. Even if SOFI stock were valued as a bank stock, that would be reasonable. Thus, I think this relatively high-growth fintech company remains very attractively priced here.
Buy SOFI Stock Now
In Q4, SoFi reported a $48 million GAAP profit, and the company is expecting around $100 million in profitability for 2024. If those numbers are achieved, and the company continues to grow its bottom line as expected to 2026, this growth stock will look more like a value stock right now.
For growth-at-a-reasonable-price investors, SOFI stock is one to buy right now. It may not be this cheap for much longer.
On the date of publication, Chris MacDonald 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.
