When
SoFi Technologies
reports earnings Monday morning, investors will be watching closely to see if the company succeeds in posting its first quarterly profit.
The fintech’s management has previously said it expects to report its first profit—according to generally accepted accounting principles—for the 2023 fourth quarter. That said, analysts are a bit less optimistic, expecting earnings to break even, according to FactSet. Wall Street has also penciled in revenue of $572 million for the period, sharply higher than the $443 million recorded the year-ago quarter.
SoFi
began as a lender focused on refinancing debt but now operates through three segments: lending, which includes student, personal, and home loans; financial services; and a technology platform.
Student loan origination was a hot topic for much of last year as the moratorium on student loan payments was lifted. However, attention has largely since shifted to the company’s non-lending segment, after CEO Executive Officer Anthony Noto said in the fall that he sees the nonlending businesses as “the driver of growth” into the fourth quarter and the following year.
That pivot in focus is puzzling to J.P. Morgan analysts Reginald Smith and Charles Pearce, however.
“Personal loan origination and loan growth is extremely accretive under SoFi’s fair value accounting methods,” they wrote in a Jan. 26 report. “We can’t understand why the company would voluntarily put the breaks on the business, with so much balance sheet capacity.” The analysts maintained their Neutral rating and $10 price target on the stock, as they expect near-term pressure on the stock. They cited investor focus on deteriorating credit trends and concerns about 2024 guidance.
Still, “we continue to view SoFi as a long-term winner in the neo/digital bank space,” they added.
Mizuho analyst Dan Dolev also highlighted a few factors to watch in the upcoming report, including the number of loans sold and the price at which they were sold. Mizuho rates the stock at Buy with a price target of $12.
Over the last 12 months, SoFi stock has risen 28%.
Write to Emily Dattilo at [email protected]
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