According to the company, 2024 is a “transitional year” for SoFi Technologies (NASDAQ:SOFI) stock. SoFi is shifting away from lending and toward other financial services and SoFi’s technology platform. Its outlook disappointed investors, leading to panic-selling of its stock. It was a mistake, but you can benefit from the sellers’ haste.
Besides, an expert on Wall Street recognizes the opportunity as short-term stock traders worry excessively about SoFi Technologies. It’s a gift from the market when a solid business SoFi Technologies is underappreciated, so grab some cheap shares before they’re not cheap anymore.
SoFi Stock Tumbles Despite Earnings Beat
SoFi Technologies disclosed its first-quarter 2024 financial results on April 29. SoFi stock tumbled 10% that day, followed by an additional 3.8% share-price decline the next day.
Yet, SoFi Technologies’s results were actually quite good. The company celebrated its second consecutive quarter of GAAP profitability in Q1 of 2024.
SoFi generated quarterly adjusted net revenue of $580.65 million, easily beating the analysts’ consensus estimate of $555 million.
SoFi Technologies posted earnings of 2 cents per share, while analysts had only expected 1 cent per share. That’s not a bad start to a “transitional year,” wouldn’t you agree?
However, as often happens, investors disregarded SoFi Technologies’ actual results and instead obsessed over the company’s forward guidance. For the current quarter, SoFi expects to generate adjusted net revenue in the range of $555 million to $565 million. The midpoint of that range is $560 million, and Wall Street called for $581 million.
Be Rational When Others Are Fearful
It’s important to observe that not all of SoFi Technologies’ future guidance points are disappointing.
For one thing, SoFi lifted its full-year 2024 adjusted net revenue forecast from $2.365 billion to $2.405 billion previously, to $2.39 billion to $2.43 billion currently. Analysts, meanwhile, predicted $2.376 billion in full-year revenue.
In addition, SoFi Technologies raised its full-year 2024 earnings guidance range from 7 cents to 8 cents previously, to 8 cents to 9 cents currently. This new range looks favorable, considering Wall Street called for 8 cents.
I’m impressed with Mizuho Securities analyst Dan Dolev, who is taking a “longer-term perspective” instead of panicking as SoFi stock sells off. Dolev reiterated Mizuho’s “buy” rating and $12 price target on the stock.
That’s quite optimistic, and I’m only looking for the SoFi share price to reach $10. Yet, I appreciate Dolev’s audacious stance on SoFi Technologies. Mizuho’s recent report on SoFi is appropriately titled “Overrated Fears + Underrated Accomplishments = Buying Opportunity.”
I agree 100% with that title. SoFi Technologies’ accomplishments can be seen in the company’s actual, Street-beating quarterly results. Plus, two consecutive quarters of GAAP profitability is nothing to sneeze at.
SoFi Stock: Aim for $12, but at Least Hit $10
The worry warts panic-sold their SoFi Technologies shares based on the company’s disappointing current-quarter revenue guidance. They totally overlooked SoFi’s solid first-quarter results and fairly optimistic full-year outlook.
Therefore, I concur with Dolev’s assessment. There’s definitely a buying opportunity here, and SoFi stock could eventually hit Dolev’s $12 price target.
I’m not aiming as high, though, but I expect the stock to reach $10 at least. So, feel free to add some SoFi Technologies shares to your portfolio before the market comes to its senses.
On the date of publication, David Moadel 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.
