Shares of SoFi Technologies (NASDAQ: SOFI) nose-dived 9.9% through 12:15 p.m. Monday even after the company reported an earnings beat this morning.
Heading into the first quarter of 2024, analysts forecast SoFi would earn just $0.01 per share on $556 million in quarterly sales. In fact, profits were twice what were expected at $0.02 per share, and sales came in strong at $645 million. But the stock is still down.
The first-quarter earnings report
Sales for the first quarter surged 37% year over year, which is a nice start. SoFi also flipped from a year-ago loss to a profit. Total deposits at the internet bank rose 16% to a record $3 billion, and its customers are now ranked as “high quality,” with a median FICO score of 774, making them good candidates for loans. (The company’s net interest margin is a strong 5.9%).
All of that sounds great. Where things turned bad was on guidance.
Is SoFi stock a sell?
Management forecast 2024 revenue will grow faster than expected, to about $2.4 billion, with higher earnings as well — at least $0.08 per share, as calculated according to generally accepted accounting principles (GAAP). The problem is that in the second quarter, SoFi said revenue will only be $555 million to $565 million, whereas Wall Street wants to see revenue of $580 million.
That seems to have freaked out investors, but I don’t think they need worry. Assuming SoFi hits even the low end of its target this year, it will grow revenue 89%, and earnings will grow even faster. Indeed, earnings are expected to triple in 2025, then double again in 2026, by which time the company would be earning nearly $0.50 per share.
Is $7 a share really too much to pay for a stock earning $0.50? I don’t know about you, but 14 times earnings, even two years out, seems cheap for a fintech growing as fast as SoFi is. Investors are selling SoFi stock today, but to me, it really looks like a buy.
Should you invest $1,000 in SoFi Technologies right now?
Before you buy stock in SoFi Technologies, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and SoFi Technologies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $537,557!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of April 22, 2024
Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Fair Isaac. The Motley Fool has a disclosure policy.
Why SoFi Technologies Stock Dropped 10% on Earnings Monday was originally published by The Motley Fool
