- While Sofi missed its EPS loss estimate, the company is still posting double-digit growth in many areas.
- The second half should show the contributions of its margin trading added during the quarter
- The company has increased its revenue for fiscal 2022 to between $1.508 billion and $1.513 billion.
The stock of digital personal finance company Sofi Technologies (NASDAQ: SOFI) fell (-49%) over the year. The personal finance fintech offers customers a one-stop-shop for financial services ranging from loans and banking to cash management and investment services. The Company also operates several financial platforms, including Galileo which serves financial and non-financial institutions, Apex for investment custody and clearinghouse services, and Technisys which is a cloud-based digital banking platform. With serious headwinds including rising interest rates, a bear market in equities, geopolitical strife and a looming recession, Sofi shares fell to historic lows of $4.82 before staging a rally . Its latest Q2 2022 results surprised investors with its double-digit revenue and net income growth and lifted estimates that propelled shares up more than 20%. Company Achieved Record Net Revenue of $356 Million and Adjusted EBITDA of More Than $20 Million in the Quarter as Membership Growed 69% Year-Over-Year last. That was the opposite of results from Robinhood (NASDAQ: HOOD) which saw revenue fall (-43.7%) in the quarter. With double-digit gains in key metrics as well as a full-year guidance range, Sofi stock could finally turn a corner for investors. The second half should show the contributions of its margin trading added during the quarter. Cautious investors looking for exposure can watch the move from opportunistic entry levels to a position at cheaper levels.
Double-digit growth indicators
Although Sofi missed its EPS loss estimate, the company is still posting double-digit growth in many areas, as evidenced by its fiscal second quarter 2022 results for the quarter ending June 2022. The company announced a adjusted diluted earnings per share (EPS) loss of (-$0.12) missing consensus analyst estimates for a loss of (-$0.10) of (-$0.02). Total revenue increased 50.1% year-on-year to $356.09 million from $344.47 million according to consensus analyst estimates. GAAP revenue increased 57% to $363 million. Sofi added 450,000 new members in the quarter to over 4.3 million members today, up 69% year-on-year. They had 702,000 new product announcements to 6.6 million, up 79% year-over-year. They achieved their eighth consecutive quarter of positive adjusted EBITDA. Its SoFi Bank division topped $2.7 billion in deposits, up 135% and generating net income of $25 million. Each of the Company’s three segments recorded double-digit growth. Lending grew 46% year-on-year to $251 million, driven by its personal lending business. Financial services grew 78% year-on-year to $30 million, driven by Sofi’s checking and savings revenue, as well as strength in its SoFi credit card and SoFi investment products. Technology platforms grew revenue 85% year-on-year to $84 million, driven by 39% growth in Galileo revenue.
CEO Noto is steering the ship in the right direction
SoFi CEO Anthony Noto commented, “We delivered another quarter of strong results with robust growth in members, products and cross-purchases. We delivered record adjusted net revenue, up 50% year over year, and our eighth consecutive quarter of positive adjusted EBITDA, which doubled sequentially. As the political, fiscal and economic landscapes continue to change around us, we have maintained a strong and consistent momentum in our business. We’ve designed our products and services to deliver sustainable growth and profitability, and that’s what we deliver,”
They raised the revenue forecast for the full year
The company has increased its fiscal 2022 revenue to between $1.508 billion and $1.513 billion, up from the previous guidance of $1.505 billion to $1.510 billion. Consensus analyst estimates were $1.49 billion. SoFi is seeing its banking charter start to pay off as it offers an industry-leading 1.8% APY and rewards program. The company also added margin investing for the first time this quarter, as well as extended trading hours. Options and new proprietary ETFs are expected to be added by the end of the year. Oppenheimer raised full-year EPS estimates for a loss of (-$0.46) from (-$0.48) on its outperform rating and target price of $13. The stock has regained positive sentiment and has the potential trajectory for a year-end rally.
SOFI Opportunistic Entry Levels
Using rifle charts on the weekly and daily time frames provides an accurate view of the price action playing field for SOFI stocks. Rifles weekly chart crashed after rejecting $10.10 Fibonacci level (fib) as it fell to a low of $4.82 before staging a rally. The weekly downtrend attempts to reverse on a breakout as the 5-period moving average (MA) up at $6.67 crosses the 15-period MA at $6.53 towards the upper Bollinger Bands weekly (BB) at $9.56. The weekly stochastic has a mini pup going through the 40 band. The weekly weak market structure (MSL) buy triggered on a breakout at $6.37. The Rifle’s daily chart sparked a breakout from the PUPs as the stock exploded higher on its earnings report to tag its daily top BBs at $8.46. The daily 5-period MA rises to $7.44 and the 15-period MA to $6.83. The daily 50-period MA stands at $6.39. The daily BB lower sits at $4.81. The daily stochastic has moved back towards the 70 band. SOFI has a short stake of 18%, which makes it vulnerable to a short squeeze. Cautious investors can watch for opportunistic entry levels at the $6.89 fib level, $6.37 weekly MSL trigger, $6.11 fib level, $5.79, $5.44 and $5.17. The upward trajectories are from the $10.10 fib level to the $14.65 fib level.
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