- While Sofi missed its EPS loss estimate, the Company is still showing double digit growth in many areas.
- The second half should show the contributions of its added margin trading in the quarter
- The Company raised its fiscal full-year 2022 revenues to come in between $1.508 billion to $1.513 billion
Digital personal finance company Sofi Technologies (NASDAQ: SOFI) stock has fallen (-49%) on the year. The personal finance fintech offers customers a one-stop shop for financial services from loans to banking services, cash management, and an investment services. The Company also operates several financial platforms including Galileo which services 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, an equities bear market, geopolitical conflicts, and a looming recession, Sofi shares sank to all-time lows of $4.82 before staging a rally. Its latest Q2 2022 earnings results surprised investors with its double digit top and bottom line growth and raised estimates that catapulted shares up over 20%. The Company hit record net revenues of $356 million and adjusted EBITDA of over $20 million in the quarter as membership rose 69% over the year ago period. This was the opposite of Robinhood’s (NASDAQ: HOOD) results that saw revenues tank (-43.7%) in the quarter. With double digit gains in key metrics along with a full-year guidance range, Sofi stock may finally be turning the corner for investors. The second half should show the contributions of its added margin trading in the quarter. Prudent investors looking for exposure can watch for opportunistic entry levels scale into a position at cheaper levels.
Double-Digit Growth Metrics
While Sofi missed its EPS loss estimate, the Company is still showing double digit growth in many areas as evidenced by its fiscal second-quarter 2022 results for the quarter ending June 2022. The Company reported diluted adjust earnings-per-share (EPS) loss of (-$0.12) missing consensus analyst estimates for a loss of (-$0.10) by (-$0.02). Total revenues rose 50.1% YoY to $356.09 million versus $344.47 million consensus analyst estimates. GAAP revenues grew 57% to $363 million. Sofi added 450,00 new members in the quarter to over 4.3 million today members, up 69% YoY. They had 702,000 new product ads to 6.6 million, up 79% YoY. They achieved its eight consecutive quarter of positive adjusted EBITDA. It’s SoFi Bank division surpassed $2.7 billion in deposits, up 135% and generating net income of $25 million. Each of the Company’s three segments saw double digit growth. Lending grew 46% YoY to $251 million led by its personal loans business. Financial services grew 78% YoY to $30 million led by Sofi checking and savings revenues along with strength in its SoFi credit card and SoFi invest products. Technology platforms grew top line by 85% YoY to $84 million driven by 39% growth in Galileo revenues.
CEO Noto is Steering the Ship in the Right Direction
SoFi CEO Anthony Noto commented, “We delivered another quarter of great results with robust growth in members, products, and cross-buy. We generated record adjusted net revenue, which was up 50% year-over-year, and our eighth consecutive quarter of positive adjusted EBITDA, which doubled sequentially. While the political, fiscal, and economic landscapes continue to shift around us, we have maintained strong and consistent momentum in our business. We built our products and services to provide durable growth and profitability, and that is what we are delivering,”
They Raised Full-Year Revenue Guidance
The Company raised its fiscal full-year 2022 revenues to come in between $1.508 billion to $1.513 billion from previous guidance of $1.505 billion to $1.510 billion. Consensus analyst estimates were for $1.49 billion. SoFi is seeing its banking charter start to pay off as it offers an industry leading 1.8% APY and a rewards program. The Company also added margin investing for the first time in this quarter along with extended trading hours. Options and new proprietary ETFs are scheduled to be added by the year-end. Oppenheimer raised fiscal full-year EPS estimates for a loss of (-$0.46) from (-$0.48) on its Outperform rating and $13 target price. The stock has regained positive sentiment and has the potential trajectory to rise in the years end.
SOFI Opportunistic Entry Levels
Using the rifle charts on the weekly and daily time frames provide a precise view of the price action playing field for SOFI stock. The weekly rifle chart collapsed after rejecting the $10.10 Fibonacci (fib) level as it fell to a low of $4.82 before staging a rally. The weekly downtrend is attempting to reverse on a breakout as the rising 5-period moving average (MA) at $6.67 crosses over the 15-period MA at $6.53 towards the weekly upper Bollinger Bands (BBs) at $9.56. The weekly stochastic has a mini pup rising through the 40-band. The weekly market structure low (MSL) buy triggered on a breakout through $6.37. The daily rifle chart triggered a pup breakout as shares exploded higher on its earnings report to tag its daily upper BBs at $8.46. The daily 5-period MA is rising at $7.44 and 15-period MA at $6.83. The daily 50-period MA sits at $6.39. The daily lower BBs sit at $4.81. The daily stochastic crossed back up towards the 70-band. SOFI has an 18% short interest, making it susceptible to a short squeeze. Prudent investors can watch for opportunistic entry levels at the $6.89 fib, $6.37 weekly MSL trigger, $6.11, $5.79, $5.44, and $5.17 fib level. Upside trajectories range from the $10.10 fib level up towards the $14.65 fib level.