SoFi Struggles But May Recover Soon

SoFi Struggles But May Recover Soon

SoFi Technologies Inc (NASDAQ: SOFI) is a financial services company known primarily for its student loan refinancing services. Founded in 2011, the company has since expanded its product line to offer a handful of different credit services like financial planning, banking services, credit cards, investment accounts, mortgages, and personal loans.

It seems their penultimate objective is to become a kind of one-stop-shop that can address all the potential financial needs of their clients via their mobile app as well as their website. Recently (in 2020), the San Francisco-based firm acquired Galileo, and this helped them to further expand their offerings to now include payment and account services for other financial products like debit cards and digital banking.

The past few years have not been kind to SoFi Technologies since their Initial Public Option on June 1, 2021. Shares of their Class A common stock are publicly traded on the Nasdaq Global Market, and their value has been mostly on a steady decline since its IPO. With a solid opening near $20 per share, the stock peaked near $23 twice by November. Unfortunately, SoFi's share value fell substantially by the end of that first public year and has been plummeting ever since.

Indeed shares of SoFi are currently trading at around $5.50 per share.

Consistent Performance Could Yield Near-Term Recovery

The good news is that SoFi's share value has gained more than 1.9 percent in the final week of June to an average price target of $10. This is just north of the low estimate of $7 and half of its high estimate of $20. As we close out the month, this new average price target represents a change of more than 81.4 percent from the last price, which was $5.54.

Some data suggests the actual consensus price target may be closer to $12.40, and this means the stock is currently trading notably below the predicted analyst range.

For the past four quarters, Earnings Per Share (EPS) estimates have mostly been on target, except for Q2, 2021. At that time, analysts estimated SoFi EPS value would slip only by about 6 points but the actual performance was down 48 points.

Things greatly improved the following quarter with Q3 2021 estimated to slide $0.14 but slipping only about $0.05 instead. Q4 2021 fared just as well, as analysts estimated a decline of $0.16 and an actual decline of only $0.15. Q1 of 2022 had the exact same result, with an estimated $0.15 loss but an actual—more favorable—EPS dip of $0.14.

Earnings Per Share Is Down but Holding Steady In the Long Term

With that in mind, current EPS trend estimates have remained mostly consistent along with analyst trends. For example, Q2 2022 EPS estimate trends three and one month ago were at -$0.11 and -$0.12, respectively. The following quarter, Q3 2022, posted estimated trends of -$0.08 at the current level as well as both three and one month ago.

In addition to this, the fiscal year 2022 EPS estimate trends are also mostly consistent. At present, the EPS estimate is a decline of 46 points. This is mostly in line with the 45-point loss from one month ago and slightly more than the 40-point slip from three months ago. For the fiscal year 2023, the estimate appears to imply that EPS will continue to drag with a -$0.19 estimate at the three-month mark, -$0.23 at the one-month mark, and -$0.25 currently.

EPS for the current quarter is down $0.12 for the last week of June, on $341.6M in volume. The next reporting date is August 1, 2022.

If Not Overweight, SoFi Stock has a BUY Rating

And all of this remains on-trend in terms of consensus ratings and price targets over the same periods. Three months ago, the consensus price target was $17.63 with an even number of analysts giving a BUY and HOLD rating. One month ago, the consensus price target was $14.94 with two-thirds giving a BUY rating and the rest giving a HOLD rating. Finally, the current price target is around $13.85 with two-thirds giving a BUY rating, just a month ago.

Indeed, it seems the majority of analysts agree that the SoFi stock should carry a Buy rating at present. At least one analyst advises that the stock is Overweight—perhaps poised to improve even more—and then nearly half advise a Hold rating. In all, the outlook for SoFi in the short term appears to be positive.

Companies in This Article:

CompanyCurrent PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
SoFi Technologies (SOFI)$7.81+5.7%N/A-16.98Moderate Buy$13.73

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