SoFi’s Resilience: How the Fintech Giant Is Bouncing Back in 2024

Stock Market

After a slow start to the year, the SoFi Technologies (NASDAQ:SOFI) stock outlook is more positive than you might have believed.

While shares are down more than 16% since the start of trading in January, here are three reasons investors should hold on to their SOFI shares.

The SoFi Stock Outlook

As most people probably know, student loan payments resumed in the autumn of 2023, and this looked like a moment of potential growth for the company.

SoFi is one of the largest providers of student loan refinancing in the U.S., with billions of loans originated since the platform’s inception. This part of Sofi’s business has been its most profitable for a while until a COVID-era federal moratorium put a pause on student debt repayments.

With payments restarting, borrowers would likely seek more refinancing options to lower their interest rates and monthly payments, creating a tremendous opportunity for SoFi to grow its student loan business and generate more revenues and profits in the long run.

In SoFi’s Q3 earnings print, the number of lending products issued increased by 24% Y/Y, with a notable increased demand for student loan products. The company had also swung back to a net profit on a GAAP basis, further emphasizing the company is back on track.

SOFI and Crypto

In late November, the company announced it would stop issuing and servicing cryptocurrency accounts. When I wrote about this last year, I posited, though this might be unfortunate for crypto enthusiasts. The decision would allow the company to focus on other initiatives, such as its Galileo product, that could gain further traction.

However, given the SEC has approved the bitcoin ETF and cryptocurrencies have been on the rise, SoFi’s decision, in hindsight, was probably ill-advised, and the company could be losing out on the tremendous opportunity set in the burgeoning space.

Valuation Not Astronomic

Sofi’s recent profitable quarter has helped its valuation to come back from the astronomic levels it used to trade at. Currently, the online lending platform is trading at 59.6x forward earnings.

Though this may seem high, the company’s growth in recent quarters could help to put the valuation into perspective.

SoFi is also expanding its international presence through its Galileo product, which the company brought onto the platform via an acquisition back in 2020. Galileo provides technology solutions to fintech companies around the world.

The product continued to add millions of new accounts in Q4 2023, underscoring its growth.

On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Tyrik Torres has been studying and participating in financial markets since he was in college, and he has particular passion for helping people understand complex systems. His areas of expertise are semiconductor and enterprise software equities. He has work experience in both investing (public and private markets) and investment banking.

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