Shares of SoFi Technologies fell 6% following the release of a strong third-quarter earnings report, with the company showing significant growth across its financial services and technology segments.
The fintech company, led by CEO Anthony Noto, reported a net income of 5 cents per share, surpassing analysts’ expectations of 4 cents. Revenue surged 30% year-over-year to $697 million, outpacing the forecast of $632.3 million. Despite these impressive results, SoFi’s stock dipped on Tuesday as investors weighed factors impacting the share price.
SoFi’s strong performance is credited to its expanding segments in financial services and technology, which now contribute nearly half of the company’s adjusted net revenue. In Q3 2024, these areas grew by 64% year-over-year as the company pivoted toward more capital-light, fee-based revenue streams. SoFi’s lending arm has also gained momentum, posting its best refinancing quarter since 2022. The company’s efforts to broaden brand visibility have been similarly fruitful, with a 40% increase in brand awareness, reinforcing its vision of becoming a top-tier financial institution.
Analysts expressed optimism regarding SoFi’s prospects. Mizuho analysts retained an “outperform” rating, citing SoFi’s substantial growth in membership, now reaching 9.4 million, a 35% increase from the previous year. Analysts from Jefferies echoed this sentiment, raising their price target and forecasting that SoFi’s performance will position it well if interest rates decline in the future. Veteran analyst Stephen Guilfoyle, who increased his price target for SoFi stock to $13.25 prior to earnings, reaffirmed his confidence in the company’s long-term trajectory, noting Noto’s strategic focus on growth and personal investments in the firm as strong indicators of potential.
Investors appeared cautious about SoFi’s immediate future, as the company’s stock decline came amid broader market volatility. Analysts suggested that bearish sentiment surrounding capital and cash flow concerns may have contributed to this reaction, though many maintained that these fears are overblown. SoFi’s raised 2024 revenue guidance, which now estimates annual growth of 22-23%, is a key indicator of the company’s robust foundation, according to Jefferies.
Guilfoyle, undeterred by the recent market response, plans to add to his SoFi shares, reiterating a long-term target price of $13.50.
With input from the Street and the Motley Fool.
