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SoFi Technologies stock jumped on Monday after the fintech company delivered strong deposit numbers for its second quarter and boosted its financial guidance.
Shares of SoFi (ticker: SOFI) were up 21%, to $11.53 in afternoon trading. The price has more than doubled this year.
The last several years have been a journey to create a one-stop shop for financial services needs, a strategy that is now bearing fruit with “unmatched financial results,” CEO Anthony Noto told Barron’s on Monday. “So I think it just feels like the quarter in which all the pieces have come together in financial results, both in terms of revenue growth, member growth, and profitability,” Noto said.
SoFi operates through three segments: lending, financial services, and a technology platform. For its second quarter, the company posted a loss of 6 cents a share from consolidated non-GAAP adjusted net revenue of $488.8 million. Analysts had penciled in a loss of 7 cents a share on revenue of $474 million, according to FactSet. Revenue was bolstered by strong growth in the technology platform and financial services segments, Noto said.
SoFi’s personal and home-loan origination volumes beat Wall Street’s expectations, though student-loan volume fell short. Personal-loan origination volume was $3.74 billion, rising 51% from the year-ago quarter, boosted “by years of investment in technology to automate and accelerate the application-to-approval process for qualified borrowers,” according to the company.
Student-loan volume fell 1% to $395.37 million, continuing “to reflect the uncertainty around federal student-loan payments,” SoFi said. Home loans fell 27%.
Total deposits rose 26% to $12.7 billion at the end of the quarter. The number of members, or customers, increased as well.
The company now expects 2023 adjusted net revenue of $1.97 billion to $2.03 billion, up from its prior guidance of $1.96 billion to $2.02 billion. Analysts polled by FactSet had expected 2023 revenue of $1.991 billion ahead of the report.
Noto said the more upbeat guidance is the result of higher revenue from financial services and tech, as well as continued strength in lending. It also continues an assumption by management that origination levels in its student-loan refinancing business will stay at current levels until September and then rise. The company doesn’t expect a return to prepandemic levels this year.
In a Monday report titled “Good Times Never Seemed So Good,” Mizuho Securities analysts called the uptick in guidance a sign of strength and praised the second-quarter numbers. They maintained their Buy rating with a price target of $9.
Truist Securities analysts echoed that optimism, writing that SoFi is changing the way consumers bank. “Legacy banks do not and cannot replicate this model, in our view,” they wrote. “As a result, SoFi is blasting a hole through their client bases, intrinsically undermining the foundation of a increasingly vulnerable ecosystem.”
They also maintained a Buy rating on the company but lifted their price target to $16 from $11 on Monday.
Overall, analysts are mixed on the stock, with 32% with Buy ratings, 58% with Neutral ratings, and 11% with Sell ratings, according to FactSet.
Coming into Monday’s results, the stock had gained around 69% since the first-quarter earnings report on May 1, partly because SoFi’s financial performance has been strong. For the first quarter, SoFi posted a narrower-than-expected loss of 5 cents a share on revenue of $460.2 million. Personal loan originations climbed 46% from the year-ago quarter, while student-loan volume took a plunge.
Headlines about student-loan forgiveness have given the stock an extra lift. Shares have doubled this year as Congress moved to require borrowers to resume repayments in the fall and the Supreme Court blocked President Joe Biden’s debt-forgiveness plan.
SoFi was founded in 2011 and taken public on June 1, 2021, through the special purpose acquisition company Social Capital. Shares opened at $21.97 and closed at $22.65 that day, according to Dow Jones Market Data. Since then, and despite this year’s rally, the stock has declined sharply, ending Friday at $9.55.
The company began as a lender focused on refinancing student debt. Its acquisition of Technisys SA last year helped turn it into a full-service bank.
Write to Emily Dattilo at [email protected]
