Wall Street Logic Strikes Again as SoFi Tumbles After Obliterating EPS Estimates (Shares Dip 12%)

So it appears that, SoFi Technologies (NASDAQ: SOFI) just dropped some major heat for Q3 2024, posting record numbers across the board, yet somehow, the stock performed a graceful swan dive into the concrete (-12%). Why? Well, apparently, making actual money isn’t cool anymore. 

(Source: Giphy) 

For starters, the “everything is awesome part” came when Sofi reported a whopping $697 million in net revenue for the quarter, representing a solid 30% year-over-year growth. Additionally, they even managed to turn a profit for the fourth straight quarter, pulling in $61 million, which in the fintech world is like finding a unicorn that poops gold.

(Source: Yahoo Finance) 

This had CEO Anthony Noto declaring it “their strongest quarter in history" - while raising the company’s full-year guidance, now expecting $2.535 to $2.550 billion in adjusted net revenue for 2024 (up $85 million from previous predictions). 

(Source: Business Wire) 

Which honestly, is pretty easy to see why, especially as  SoFi’s Financial Services and Tech Platform segments are now 49% of adjusted net revenue—up from 39% last year. These segments combined grew revenue by a ridiculous 64% year-over-year. Meaning, SoFi is deliberately pushing into capital-light, higher-return-on-equity (ROE) revenue streams, which means less risk and better margins. 

On the other hand, Sofi’s Loan Platform Business is also evolving, offering “just in time” lending which is exactly what it sounds like if you have no idea what it sounds like. This had the company recording $1 billion in personal loan volume generated for third parties.

(Source: Giphy) 

But, but, but… With all this good news, you’d think SoFi stock would be moonwalking into the green, nope. You see, despite performing like a friggin superstar on steroids, their tech segment didn't grow quite as fast as some guy named Mark at Deutsche Bank thought it should. Heaven forbid. 

Simply put, Deutsche Bank’s Mark DeVries noted that while SoFi is growing in the right areas, the tech platform’s revenue didn’t quite live up to expectations. And when you’re priced for perfection, even a little miss can cause a massive -12% drop. 

(Source: TipRanks) 

The bright side though is even after the stock took a hit, SoFi’s long-term story looks ‘solid’. They’ve posted four straight quarters of profits, a feat that’s no small potatoes for a fintech company. Sure, the stock price might seem high with a price-to-earnings ratio around 83, but with profits expected to more than double next year, it might actually be *cheap*.

In the end, SoFi managed to do everything right and still got clapped by overpaid number crunchers on Wall Street. But hey, at least they're profitable, which is more than we can say for half the companies trading at triple their valuation.

(Source: Giphy) 

For this reason, management is confident about 2025, with Noto saying they’ll finally have “wind at our back” instead of facing headwinds. Translation: They’re expecting interest rates to stabilize, which will only help their lending business. So yeah, SoFi stumbled a bit on Wall Street’s impossible-to-please treadmill, but if you’re playing the long game, this might just be a buying opportunity.

In the meantime, keep an eye on Sofi and as always stay safe and stay frosty, friends! Until next time… 

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Stocks.News does not hold positions in companies mentioned in the article.