SoFi Technologies Inc (NASDAQ: SOFI) is close to 15% in premarket on Monday even though the bank reported market-beating financial results for its fourth financial quarter.
Investors are primarily responding to the company’s earnings guidance that fell a bit short of experts’ forecast.
The management expects per-share earnings to print at 3 cents in the first quarter and 26 cents for the full year – versus the 5 cents and 28 cents that analysts had forecast.
Despite a material hit this morning, SoFi stock is up nearly 150% versus its low in early August.
SoFi’s management remains as bullish as ever
SoFi chief executive Anthony Noto attributed the guidance mismatch to the yearly tax obligations not baked into consensus estimates.
It may be reasonable to consider loading up on the fintech stock following today’s weakness also because “the best is yet to come,” he told investors in a press release.
SoFi stock remains attractive also because the company handily topped Street estimates in its fiscal fourth quarter.
It earned 5 cents a share on $739 million in adjusted net revenue versus 4 cents per share and $675 million that analysts had called for.
That said, shares of the bank remain unattractive for income investors as they don’t currently pay a dividend.
Cramer favours SoFi stock over other fintech
Investors could drive confidence in SoFi stock from the margin growth as well. The company’s margin hit a record in its recent quarter since early 2022.
SoFi has been committed to disrupting the traditional finance industry since its inception in 2011.
Initially, it focused only on the student loan market but has expanded over time into several other businesses, including personal loans, mortgages, and investment platforms.
That was part of the reason why famed investor Jim Cramer favored SoFi shares over Nu Holdings and other fintech as he spoke with a caller last week on “Mad Money”.
Note that the Street-high price target on SOFI currently is $20 which indicates potential for about a 30% upside from current levels.
SoFi stock is not particularly expensive to own
SoFi chief executive Anthony Noto dubbed 2024 a “transformational year” in the earnings release, in which the company achieved all that it has set out to accomplish.
That included “diversifying the business, making it less capital intensive, reducing the risk, and driving meaningful profitability to ensure we had adequate capital on our balance sheet.”
The Nasdaq-listed firm plans on investing at a higher rate this year as investments tend to “drive direct, strong returns,” he added.
What’s also worth mentioning is that SoFi stock is not particularly expensive at about 5 times its next year’s sales.
If it can continue to steal customers from conventional banks, the company’s share price could record a new all-time high in 2025.
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