SoFi Stock Tumbles: 'Bears Are Confused' After Earnings Beat

SoFi Technologies, Inc. (NASDAQ: SOFI) shares initially surged following the release of its third-quarter earnings report but subsequently reversed course, leaving investors and analysts scratching their heads. The fintech company reported strong financial results, including a 30% year-over-year increase in total net revenue to $697.1 million and a net income of $60.7 million, its fourth consecutive quarter of profitability. However, the stock price fell by more than 9% in morning trades, retreating back to its 21-day line.


SoFi's earnings beat analysts' expectations, with adjusted net revenue of $689.4 million surpassing estimates of $632.3 million, and earnings per share of $0.05 exceeding projections of $0.04. The company also raised its full-year revenue guidance to a range of $2.535 billion to $2.55 billion, up from its previous range of $2.425 billion to $2.465 billion. Despite these positive developments, the stock price decline has left investors and analysts puzzled.


One factor contributing to the confusion among 'bears' is the revenue growth in SoFi's technology segment, which came in slightly below expectations. While the financial services and tech platform segment grew by a combined 64% year-over-year, driving record contribution profit in the quarter, the technology segment's growth may have fallen short of some investors' expectations. Deutsche Bank analyst Mark DeVries noted that SoFi's growth in its financial services business appears to be in the right areas, but the company's revenue growth in the technology segment was slightly below expectations.


Another factor influencing investor sentiment is the improvement in SoFi's credit quality. Personal loan charge-offs and delinquencies both decreased, which should tend to boost profits at the company. Net interest income grew by 25% year-over-year, reflecting the positive impact of improved credit quality on SoFi's financial health.


The raised guidance for full-year revenue and earnings also contributed to the confusion among 'bears.' SoFi now expects adjusted net revenue of $2.535 to $2.550 billion, which is $85 million higher than its previous guidance range. The company also expects full-year earnings of 11 to 12 cents per share. Despite these positive developments, the stock price decline suggests that some investors may be cautious about the company's future prospects.

In conclusion, SoFi's earnings beat and raised guidance should have been a cause for celebration among investors. However, the stock price decline indicates that some investors are uncertain about the company's future growth prospects, particularly in the technology segment. As SoFi continues to execute on its strategic initiatives and deliver strong financial results, investors will need to weigh the company's potential against the current market conditions and their own risk tolerance.