SoFi Technologies (NASDAQ: SOFI) had a monster of a day on Monday, spiking several times throughout the day after receiving an upgraded analysis from Kevin Barker at Piper Sandler. Barker said the market might have discounted the growth potential of SoFi, sending the stock value soaring.
Specifically, the Piper Sandler analyst upgraded the digital personal finance company's stock from Neutral to Overweight; and he did this while lowering his price target at the same time, from $12 to $10. Apparently, Barker believes the company is set to accelerate Ebitda in the second half of this year, which will carry on into 2023.
As such, SoFi stock was up as much as 5.7% on Monday, to $7.14. This may only be a small recovery after shedding 57% of its value this year—mostly due to the reasons mentioned above—which forced the company to lower its full-year guidance last month.
By the close of the day, SoFi Technology had slipped just a little from its highest point on the day, to $6.91. This was still an increase of 2.37% on the day. In after-hours trading, SoFi continued to pick up some steam, adding another $0.05 cents of value, to register at $6.96.
A Slow, But Promising, Start
Since November (2021), SoFi stock has seen a drastic decline. As a matter of fact, the firm was trading below both the declining 50-day simple moving average line as well as the declining 200-day moving average line.
However, since January the trading volume has increased. This suggests that traders are more actively opting for the stock. Indeed, the daily On-Balance-Volume (OBV) line may have also seen a dip through the beginning of May but that also hints at a potential reversal.
At the close of Q1, SoFi reported a loss of $0.14 earnings per share. This may not seem like a positive note, but it was in line with analyst expectations. Perhaps a better metric for them would be their adjusted earnings before interest, taxes, depreciation, and amortization, which they reported to be $9 million on a revenue somewhere between $330 and $340 million. Analysts had expected to see revenue for the fintech company in the $343.7 range.
That in mind, prices have slipped lower than the 12-day price momentum from December. This gap between the price action and the indicator seems to suggest that the difference is actually bullish in this case, which may foreshadow a rebound soon.
The obstacles for SoFi came after the company reported the second quarter and full-year guidance. Unfortunately for the financial services firm, these numbers fell short of all analyst forecasts.
SoFi Sets New Revenue Record
But things while the initial outlook may have seemed murky at the close of the first quarter, the number reflect great possibility. For one, SoFi managed to add more than 400,000 new members, bringing their total clientele to upwards of 3.9 million. In addition, SoFi grew their total lending and financial services segment up to near 5.9 million.
Along with this, SoFi has recently disclosed they have been recording approximately $100 million in new deposits every single week. According to Barker's analysis, this could provide the company with nearly $4 billion in deposits by year's end, if the pace keeps. This type of dynamic, Barker comments, would serve to drive down their capital costs and also reduce their dependency on loan sales as a means of revenue.
Piper Sandler Analyst Kevin Barker Also Sees a Rally Coming
In a research note, Barker commented that SoFi Technologies' rapid deposit growth coupled with the expiration of the pandemic-related student loan moratorium and strong revenue in their financial services sector should make for significant earnings growth through the next two years.
Most importantly, though, Barker reports that macroeconomic researchers at Piper Sandler expect that President Joe Biden's new student loan policy to cancel up to $10,000 per borrower could provide some cushion. While the loan interest payment/interest moratorium could remain until the end of the year, the eventual end has the potential to see thousands of people refinancing their debt, early next year. This influx of new payments could provide SoFi with between $20 and $30 million in brand new annual Ebitda.
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