SoFi Stock Drops Despite Strong Quarter: Analyst

SoFi Technologies, Inc. (SOFI) stock took a tumble on Monday, despite reporting better-than-expected fourth-quarter financial results. The company's fiscal 2025 profit guidance dragged the stock down, with shares falling 10.3% in Monday's session to close at $16.08 per share. Let's dive into the details and analyze the potential implications for investors.



SoFi reported earnings of 5 cents per share, beating estimates of 4 cents per share, and revenue of about $739.11 million, surpassing analyst estimates of $674.13 million. However, the company guided to an incremental adjusted EBITDA margin of around 30% for 2025, which was well below Street estimates of greater than 50% and below 2024's 44% EBITDA margin. This softer guidance overshadowed the strong quarterly results and contributed to the stock's decline.



JPMorgan analyst Reginald L. Smith highlighted SoFi's success in its Loan Platform Business, which originated $1.1 billion in personal loans in Q4 and generated $63 million in high-margin fee income. Smith also pointed to student loan originations being up 43% sequentially and reaching the highest levels since 2021. Despite these positive developments, Smith noted that the soft EBITDA guidance was a concern for the near term.

SoFi emphasized its plans to reinvest earnings back into the business during the company's earnings call. CEO Anthony Noto stated that the company would manage towards an incremental EBITDA margin of around 30% in 2025 as it reinvests in the business to drive durable growth of 25% and ultimately strong returns. This strategic decision to prioritize long-term growth over short-term profitability may have contributed to the stock's decline, as investors may have been expecting a more conservative approach to guidance.

In conclusion, SoFi Technologies reported a strong quarter with record member growth and loan originations. However, the company's fiscal 2025 profit guidance dragged the stock down, as investors may have been expecting a more conservative approach to guidance. SoFi's reinvestment strategy, while focused on long-term growth, may have contributed to the stock's decline in the near term. As an investor, it is essential to consider the company's strategic direction and weigh the potential risks and opportunities associated with its expansion into new financial services and products.