Why SoFi Stock Was Plummeting This Week

Good trailing quarterly numbers couldn’t overcome a top-line guidance number that fell short of analyst expectations.

One of the darling stocks of the fintech sector, SoFi Technologies (SOFI 1.01%), wasn’t looking so darling over the past few trading days. In the wake of the company’s latest earnings report investors were selling out of it, to the point where its value had fallen by more than 11% week to date as of Friday before market open, according to data compiled by S&P Global Market Intelligence.

A double beat on first-quarter estimates

SoFi, which combines elements of online finance and social media, kicked off the week by publishing its first-quarter results on Monday. The company’s net revenue rose a robust 37% year over year to just under $645 million. On the bottom line, SoFi flipped to a net income of $88 million ($0.02 per share), according to generally accepted accounting principles (GAAP),  which was miles better than the more than $34 million it lost in the same period of 2023.

This meant a double beat for the company, as the average analyst estimate for net revenue was slightly over $555 million. Those pundits also underestimated net income, as they were modeling $0.01 per share.

In the earnings release, SoFi CEO Anthony Noto said in the quarter his company showed “significant momentum as we responsibly grow revenue and diversify toward our financial services and tech platform segments, sustain profitability, reinforce our balance sheet, and grow our member base.”

Quarterly guidance falls short

Describing 2024 as a “transitional year,” as SoFi concentrates on building up those segments, the company raised its projection for non-GAAP (adjusted) revenue. It now anticipates this will land at $2.39 billion to $2.43 billion, with the lower end of that range edging past the average prognosticator forecast of $2.38 billion.

Management’s projection of its current (second) quarter adjusted net revenue is $555 million to $565 million, and that might have been the rub for investors — the consensus analyst estimate is just over $590 million.

SoFi did not proffer net income guidance for either the full year or the quarter.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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