SoFi Technologies: A Promising Future Ahead
As I reflect on my predictions about SoFi Technologies (NASDAQ: SOFI) from last year, I’m reminded of the importance of cautious analysis. Despite my optimism about the company’s long-term prospects, I was hesitant to predict its short-term performance. And rightfully so, as the stock has remained relatively flat over the past year.
SoFi’s financial services app has been a game-changer, offering a wide range of services to students and young professionals. The company’s lending segment, although still its largest, has expanded to include bank accounts, investment accounts, and even travel services. This diversification has attracted millions of members, with a 41% year-over-year increase in the second quarter.
However, the lending segment has faced intense pressure, causing investors to lose confidence in the stock. With interest rates finally starting to decline, SoFi is poised to revitalize its lending business and capitalize on renewed interest in student loans and refinancing.
SoFi’s revenue growth, although moderated, remains strong and steady. Net revenue increased 20% year-over-year in the second quarter, with management guiding for a 20% rise in the third quarter and 18% for the full year. As the expansion model continues to bear fruit and lending regains momentum, SoFi’s revenue should comfortably grow over the next year.
The company has also achieved profitability at scale, reporting three consecutive net profitable quarters. Analysts expect earnings per share (EPS) of $0.11 in 2024 and $0.26 in 2025. With a reasonable valuation of 3.5 times trailing 12-month sales and 39 times forward one-year earnings, SoFi stock is poised for a rebound.
Before investing in SoFi Technologies, consider the expert analysis and recommendations from The Motley Fool’s Stock Advisor team. Their top 10 stock picks for investors could produce substantial returns in the coming years.
Leave a Reply