SoFi Technologies (NASDAQ:SOFI) stock is up 32% on the year. The company projected net income of $95-105 million for 2024, driven by the end of the student loan moratorium which boosted loan repayments. Notably, revenues from this segment more than doubled to $919 million in Q3 2023.
SoFi is more than a student loan refinancing company. SoFi’s revenue diversification could lead to further growth. The company’s non-lending division accounted for 40% of its net revenue in the recent earnings report. Technology platforms also grew by 13%. This diversification boosts financial stability and opens new growth opportunities beyond loans.
Earnings Report on April 29
SoFi is set to release its Q1 2024 earnings report on Monday, and the market expects to see good results. In the previous report, SoFi impressed the market and surpassed estimates, and investors are expecting the same this time around.
With a strong market cap sitting at $6.94 billion, several research firms issued bullish ratings on SOFI. Analysts have mostly raised their price targets for SOFI stock.
Goldman Sachs (NYSE:GS) gives SoFi a neutral rating with $8 price target. Needham has a buy rating with a target of $10, while Citigroup (NYSE:C) has the same rating but with an $11 target.
However, Mizuho lowered the price target to $12 but still has a buy rating. Overall, SoFi has three sell ratings, six buy ratings, and 10 hold ratings. The average target price is $9.08, implying upside of around 20% from here.
Retail Investors Hold the Most Influence over SOFI
The shareholder makeup of SoFi Technologies reveals that retail investors hold the majority share at 54%. Conversely, institutions hold 40% of the company’s shares.
Institutions often compare their performance to a benchmark, which can increase their interest in a stock once it’s included in a primary index.
SoFi Technologies has institutional investors, suggesting analysts from these firms favor the stock. However, crowded trades, especially in non-growth companies, pose a risk.
While institutional ownership is essential, analyst sentiments also provide valuable insights. Many analysts cover SoFi, making growth forecasts readily available.
The Next Big Thing in Fintech
Amid speculation of Federal Reserve rate cuts, SoFi has gained attention. Its focus on prime borrowers minimizes credit risk and opens opportunities for cross-selling various products. SoFi acquired Golden Pacific in 2022, obtaining a full banking license for stable funding.
Analysts consider SoFi a leader in digital lending and neobanking, targeting prime consumers. When lending conditions improve, it could become a significant competitor in the growing fintech landscape.
SoFi has made significant strides in becoming a comprehensive financial institution, but transitioning from $20 billion to $1 trillion in deposits presents a considerable challenge in the short term.
Its management team has executed well, rapidly introducing new products and gaining customer acceptance. If SoFi maintains this momentum, it could significantly impact the banking sector.
Starting a position in SOFI stock now may be advantageous, given potential future improvements.
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.
