SoFi Technologies, Inc. (NASDAQ: SOFI), an American personal financial services company and an online bank, have reduced their valuation by 66.52% since the start of the year. Macroeconomic issues, including rising inflation, the Russian-Ukrainian conflict and the prospect of rising interest rates, pushed investors from high-growth stocks to safe havens.
Additionally, business-related headwinds, such as the extension of the student loan moratorium, which impacted student loan origination volumes and weak consumer demand, weighed on SoFi. . The suspension of student loan repayments was extended from May 1 to August 31 by President Biden, which also impacted the company’s refinancing activities.
Despite short-term headwinds, SoFi’s growing user base and strong product offering provide long-term growth opportunities. Moreover, rising interest rates should benefit the business on the banking side. On the upside, SOFI obtained approval for its banking charter last January.
To maintain the streak of outstanding performance “despite market volatility and the changing political, fiscal and economic landscape”, SoFi recently announced a loss of $0.14 per share in the first quarter of 2022, in line with analysts’ expectations. In addition, net income exceeded street estimates.
However, the company provided a mixed revenue outlook for the remaining period of 2022.
Following the update, the company’s shares fell more than 12% at Tuesday’s close when earnings were released ahead of schedule. Nevertheless, around 1.9% was gained during the extended trading session.
Results in detail
Total adjusted net revenue generated in the quarter increased 49% year over year to $321.7 million from the consensus estimate of $286.36 million . The strength of all three business segments (lending, technology platforms and financial services) boosted revenues.
Interestingly, net revenue exceeded the company’s forecast by $280-285 million.
In the financial services segment, product usage more than doubled, driven primarily by SoFi Money, SoFi Invest and Relay offerings. Additionally, loan proceeds jumped 20% to 1.14 million on continued demand for mostly personal loans. Accounts on the technology platform jumped 58% year-over-year to 109.7 million as new customers were added and existing customers grew.
Financial Services net revenue of $23.5 million increased 264% year over year. Additionally, Loans segment adjusted net revenue was $244.4 million, up 45% year-over-year, while Technology Platform segment adjusted net revenue increased by 32% to $61 million.
Adjusted EBITDA was $8.7 million, reflecting the seventh consecutive quarter of positive numbers.
During the quarter, total membership jumped 70% year-over-year to 3.9 million, marking the third-highest growth in membership, with approximately 408,036 new member additions. Additionally, the total number of products jumped 86%, from 3.2 million to 5.9 million, and represented the second strongest product growth ever. New product additions were 688,940 in the first quarter.
Encouragingly, SoFi CEO Anthony Noto said, “Our strong membership, product and cross-buy growth momentum also reflects the success we have had in building the SoFi brand over the past year. We are committed to investing more in product and brand marketing once we achieve appropriate scale and unit economics last year. »
For the second quarter of 2022, the company expects adjusted net revenue to be between $330 million and $340 million, representing 39% to 43% year-over-year growth. The consensus estimate is set at $342.23 million. Adjusted EBITDA is expected to be between $5 million and $15 million.
For 2022, the company forecasts adjusted net revenue of $1.505 billion to $1.510 billion, versus $1.47 billion expected by analysts. Adjusted EBITDA is expected to be between $100 million and $105 million.
The Taking of Wall Street
Following the first quarter results, Bank of America Securities analyst Mihir Bhatia maintained a Hold rating on the stock and lowered its price target to $7 (upside potential of 33.33%) for $12.
According to Bhatia, although the company posted strong results, the forecast has been changed slightly.
The rest of the street is cautiously bullish on the stock, with a moderate buy consensus rating based on seven buys and five holds. The average SoFi price target of $13.95 implies an upside potential of 165.71% from current levels.
TipRanks website traffic tool which uses data from SEMrush Holdings (SEMR) offers insight into SoFi’s performance.
According to the tool, an upward trend in website traffic was visible. In the first quarter of 2022, the total number of estimated visits to sofi.com showed an upward trend, globally, representing a jump of 140.24% compared to the fourth quarter and a significant increase of 902.25 % compared to the same quarter of last year.
Predictions based on website visits data from TipRanks proved correct, with SoFi seeing strong revenue, along with robust new member and product growth, in the first quarter of 2022.
Investors who “buy the dips” might view SoFi as a prudent investment decision, as the current price performance reflects the fact that the dips are already priced in. Additionally, vigilance on website trends reflected on TipRanks website traffic tool could be a guiding factor.
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