Despite a recent price drop, SoFi Technologies (NASDAQ:SOFI) remains a top fintech stock. The company is expected to report its Q2 earnings on July 30 before market open, with all eyes on how the company’s overall revenue growth will continue.
Indeed, the company’s Q1 numbers were stellar, with overall revenue surging 26% amid impressive 54% growth seen in the company’s tech platforms and financial services division. Accelerating growth could benefit the financial technology company.
Of course, the inverse is also true. And given there’s plenty of growth baked into the company’s current multiple, many investors are rightly on pins and needles right now.
Let’s dive into what to make of SoFi’s upcoming earnings report, and what to expect.
What to Expect from SoFi’s Upcoming Earnings Report
SoFi Technologies is projected to report higher earnings and revenues for Q2 2024. The results, expected on July 30, could influence its stock price depending on how they compare to estimates.
Management’s discussion on the earnings call will also play a significant role in future stock movements.
Analysts generally expect improved earnings, but individual investors hold a very negative view of the company. The number of portfolios holding SOFI decreased by 1.1% over the past week, with 2.9% of 746,050 portfolios invested in the stock.
SoFi faced a number of challenges over the past year, with its stock down 23% year-to-date, while the S&P 500 rose 17%. High inflation and interest rates hampered its lending growth.
However, with potential interest rate cuts and disinflation on the horizon, many investors may be looking at this stock as a buying opportunity. I’m of the view that it really depends on one’s investing time horizon, in this case.
Cooling Inflation Could Boost SoFi
Inflation currently greatly exceeds the 10-year average, and interest rates reflect this reality. However, it’s important to note that inflation has been cooling significantly, with increased bets on rate cuts picking up in the options market.
A number of top economists and analysts on Wall Street have speculated throughout 2024 about the timing of potential rate cuts. While no cuts have occurred yet, the Fed will meet again this month.
It’s possible investors might see a rate cut by late summer or September.
SoFi struggled with net income for years but recently reported positive GAAP earnings for two consecutive quarters, even without growth in its primary lending business.
The timing of a rate cut is less crucial than the broader impact it might have. When the Fed does lower rates, it could significantly boost SoFi’s lending growth.
Stay Cautious For Now
I continue to take a bullish stance on SoFi over the long-term. I think as far as fintech stocks are concerned, SoFi is among the best-positioned in this space. That said, it’s worth pointing out that this is a long-term view.
For investors taking a shorter or medium-term view of SoFi and the sector as a whole, perhaps waiting until the dust settles from this upcoming earnings report is a good move.
To be honest, I don’t know if the company will beat or exceed the performance it saw the past quarter. Indeed, momentum appears to remain on the company’s side. But anything can change quarter to quarter, particularly with all the macro volatility we’re seeing right now.
SOFI stock looks like a near and medium-term hold to me. But for those taking a longer-term view, buying this stock on dips may be the preferred option. It really depends on the timeline, in my view.
On the date of publication, Chris MacDonald did not hold (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.
On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.
