SoFi Rose After Its Q4 Earnings Beat, So Wait For It To Cool Off

InvestorPlace2022-03-04

SoFi(NASDAQ:SOFI) stock is on quite the ride, rising 18% in after-hours trading March 2 before falling 7% the next day.The company released its annual earnings report, including forecast and realized ...

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Comments

VexMonster
2022-03-05
VexMonster
Will drop to 2 bucks...not worth to buy ..
LWZ2218
2022-03-04
LWZ2218
nice
Remotecam
2022-03-04
Remotecam
$SoFi Technologies Inc.(SOFI)$stellar result but shares keep thumbling down. Tough crowd to please.
nlky
2022-03-04
nlky
Buy

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SoFi’s Q4 results were strong,with impressive user growth and high volumes for student loans.It caps an amazing few months for the online personal lender. SoFi stock rose rapidly after receiving approval for a national bank charter. It will now operate as a bank in the future, and the Office of the Comptroller of the Currency (OCC) will regulate it like a regular bank. It can offer the same interest rates and checking accounts as traditional banks.There is another reason for the company to do well. It’s forecasting how many student loans it’ll generate next quarter. The company expects volumes to return to pre-Covid-19 levels by the mid-second quarter; the statewide eviction moratorium will end on May 1. The personal loans business is Sofi’s biggest segment. That’s why investors are excited to see the moratorium expire.Currently, companies in the financial technology industry are valued much lower than they were a while ago. The sentiment is that this might be due to the general vitality that pushed up the stock prices of nearly every company last year. Growth stocks will remain under pressure because of the geopolitical tensions and the interest rate hikes slated for the year.Therefore, SOFI stock becomes a risky prospect. It is especially true after the latest earnings report. Shares are now firmly overvalued in the current environment. Once the stock cools down, it will become more enticing for the value investor.Not Putting a Foot WrongSOFI has been in the business of lending money for over 10 years now. It is constantly growing and expanding its services to reach more people. Its success can be attributed to the use of AI in their product development.SoFi’s lending product relies on artificial intelligence and machine learning software to collect and analyze information about potential borrowers. Considering that it does not have a moat, its success is outstanding. The company does not charge any origination fees or hidden fees, making it very attractive to borrowers looking for loans without any hidden costs.Concerns over Covid-19 infections were a big motivating factor for people taking part in the pandemic by staying at home. It led to a large number of users joining SoFi Technologies.The growth in customers for SoFi Technologies was significant,and it had over 2.9 million members at the end of the third quarter. At that point, it was the second-biggest quarter for new members that SoFi had seen, with 377,000 new members representing a gain of 35% sequentially.Analysts expected the growth to moderate in the fourth quarter, considering the pandemic was receding to the background. However, the latest numbers show that it hasn’t slowed down. It’s a safe guess that the company had a pretty good quarter, with 523,000 new members.Overall, the fourth quarter was an excellent one by all accounts. The company’s growth could be mostly attributed to tough loan volume, which saw a 168% increase from last year’s quarter. The total volume of loans originated saw a 50.6% rise this year. Student lending had a few strong months before the expiration of student loan forbearance.Breaking Down the Fourth-Quarter NumbersSoFi recorded a net loss for Q4 of $111 million, or 15 cents a share, compared to their previous year’s net loss of $82.6 million, or $1.85 a share. The company made $285.6 million in revenue, up from $171.5 million last year. Despite the challenges, the company reached its membership numbers and financial growth targets.“We hit new highs across our key financial and operating metrics in the fourth quarter, finishing 2021 with record annual results,” CEO Anthony Noto said.SoFi expects its first-quarter results to benefit from an increase in net interest income from the newly approved bank charter. SoFi expects the loan impact to be greater now that it has begun originating loans in its new bank.The forecast is for $280 million to $285 million adjusted net revenue for the ongoing quarter. Looking at the year as a whole, SoFi expects adjusted revenue of $1.57 billion and adjusted EBITDA of $180 million.CFO Christopher Lapointe mentioned during SoFi’s earnings call that the company’s outlook weighs in with the prospect of five rate hikes this year. He also said that the company has a really wide range of offerings, so it can do well no matter what happens.SoFi announced that it plans to acquire Technisys, a cloud-based banking platform, expecting to see its revenue go up 20% to 25% because of their contribution. The report states that SoFi will start seeing results from this acquisition when it goes through.SOFI Stock Is Great, But Not at Current RatesSoFi Technologies has seen sustained revenue growth and will continue to expand. Over the last few months, things have been going very well for the company.As much as SoFi is an attractive long-term investment with a promising future, some short-term drawbacks lower the attractiveness of this company’s current value. It seems that the company doesn’t have an adequate moat that could sustain high growth rates.As the competition in the finance sector is rising, customers will leave at a higher rate. A new fintech company can easily enter the space and grow in market share by offering smaller-margin financial services products or deploying more efficient AI solutions.The founder of SoFi has been vocal about its desire to expand while maintaining quality. As it faces increasing competition from other fintech, its success will depend on how well it can satisfy customers’ needs without sacrificing either one greatly – a difficult balancing act that many companies have found challenging in recent years.All in all, the company is exiting and executing its strategy. However, after the stellar earnings report, SOFI stock is slightly overvalued, considering the current environment. Once this stock cools off, the risk-taking investors should invest again.","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":9031378424,"gmtCreate":1646450417927,"gmtModify":1676534131433,"author":{"id":"4094995573364440","authorId":"4094995573364440","name":"VexMonster","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"4094995573364440","authorIdStr":"4094995573364440"},"htmlText":"Will drop to 2 bucks...not worth to buy ..","listText":"Will drop to 2 bucks...not worth to buy ..","text":"Will drop to 2 bucks...not worth to buy ..","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9031378424","repostId":1183400251,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9031044212,"gmtCreate":1646401573049,"gmtModify":1676534125816,"author":{"id":"3577518888738299","authorId":"3577518888738299","name":"LWZ2218","avatar":"https://static.tigerbbs.com/f53fe88ba02bdf3f307a8e715043f7e2","vip":1,"crmLevel":3,"crmLevelSwitch":0,"idStr":"3577518888738299","authorIdStr":"3577518888738299"},"htmlText":"nice","listText":"nice","text":"nice","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9031044212","repostId":1183400251,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9031054966,"gmtCreate":1646398447682,"gmtModify":1676534125412,"author":{"id":"4093854476996450","authorId":"4093854476996450","name":"Remotecam","avatar":"https://community-static.tradeup.com/news/f856a0a30bd0fa23a086fc678014e48b","vip":1,"crmLevel":6,"crmLevelSwitch":1,"idStr":"4093854476996450","authorIdStr":"4093854476996450"},"htmlText":"<a href=\"https://ttm.financial/S/SOFI\">$SoFi Technologies Inc.(SOFI)$</a>stellar result but shares keep thumbling down.&nbsp; Tough crowd to please.","listText":"<a href=\"https://ttm.financial/S/SOFI\">$SoFi Technologies Inc.(SOFI)$</a>stellar result but shares keep thumbling down.&nbsp; Tough crowd to please.","text":"$SoFi Technologies Inc.(SOFI)$stellar result but shares keep thumbling down. Tough crowd to please.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9031054966","repostId":1183400251,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9031028735,"gmtCreate":1646393155712,"gmtModify":1676534125127,"author":{"id":"3576026238693864","authorId":"3576026238693864","name":"nlky","avatar":"https://community-static.tradeup.com/news/7fbeeefd8715f5d2962a242553e8c7f2","vip":1,"crmLevel":4,"crmLevelSwitch":0,"idStr":"3576026238693864","authorIdStr":"3576026238693864"},"htmlText":"Buy","listText":"Buy","text":"Buy","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9031028735","repostId":1183400251,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":55,"commentSize":4,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/1183400251"}