Losing over 18% of its value because of a challenging market landscape, SoFi Technologies (NASDAQ:SOFI) stock remains a great choice. It has been outperforming its peers, and it shows in their previous earnings reports.
The company exceeded market estimates two consecutive times in a row, especially its Financial Services and Technology Platforms. These segments saw significant sales growth, emphasizing SoFi’s diversified revenue streams beyond lending.
Its SoFi’s earnings report revealed a 26% year-over-year increase in net sales, with its financial services segment soaring by 33%. The company maintained a solid top line despite concerns about high interest rates.
While there’s apprehension regarding its lending focus, management’s conservative approach forecasts a slight revenue decline. However, revenue from other segments is steadily growing, promising overall improvement in both revenue and profit.
With a growing user base and potential rate cuts, SoFi Technologies presents an enticing long-term investment opportunity.
Strong Financial Standing
Transitioning into a fintech firm, it hasn’t been easy for SoFi Technologies, especially when speculation is around its future. Despite a recent earnings beat, SOFI remains down 25% for the year, though it saw a 7.23% uptick since April 30th.
Analysts suggest a ‘transition year’ ahead, while others foresee strength with a full banking license, urging a closer examination of forecasts.
In Q1 2024, SoFi demonstrated robust growth with a 35% surge in both member count and product offerings. Beating EPS expectations at $0.02, it achieved positive net income for the first time in Q4 2023, signaling sustained profitability.
Despite a temporary stock dip after the strong performance, swing traders capitalized on 30% gains from May 23 to 24.
SoFi sustained seven quarters of beating earnings expectations since Q3 2022, but a recent revenue drop raised concerns.
Despite this, the financial services segment is projected to grow by 75% YoY in 2024, aiming for half of SoFi’s total revenues. Despite the high-interest-rate environment, SoFi anticipates maintaining lending revenue between 92% to 95% of the previous year’s levels, supported by loan originations.
Bulls See a 70% Upside for SOFI Stock
After a meeting with a top executive at SoFi Technologies, Mizuho Securities analysts reiterated their optimistic outlook, foreseeing a potential 70% upside.
They rate SoFi as a Buy with a target price of $12. SoFi’s guidance during the second-quarter earnings report suggested lending revenue would remain at 92% to 95% of the previous year’s level, prompting investor inquiries about loan growth.
Mizuho analysts observed cautious loan growth due to economic indicators but found SoFi’s management healthy. They appreciated clarity on delinquent loan sales and remained bullish on SoFi. On Monday, operating across lending, financial services, and technology, SoFi’s stock rose 2.8% to $7.14.
SOFI is a Strong Buy
SoFi expanded its offerings beyond lending to banking and more, known for its user-friendly interface and low-fee products. Its comprehensive services appeal to young professionals and millennials, reflected in a 35% rise in membership and product count in Q1 2024.
Management anticipates a 15% rise in adjusted net revenue for Q2 and 16% for the full year. The financial services segment, growing at 75% annually, excludes lending, encompassing banking and investing.
This puts SoFi in a good light for the coming years, signaling investors to buy the stock now.
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.
