SoFi (NASDAQ:SOFI) will report its Q3 financial results on November 1. While macro weakness and concerns around consumers’ health pose challenges, the momentum in its business will likely be sustained on the back of member and product growth. Further, strength in the personal loan business should support its growth.
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SoFi added about 450K new members in Q2 on a sequential basis (the second-highest member growth in any quarter). Further, its products increased by 702K quarter-over-quarter. Given this growth, SoFi’s adjusted revenue and EBITDA surpassed its previous guidance and recorded stellar growth.
Management’s upbeat full-year outlook indicated that the momentum in its business would likely be sustained. Further, addressing concerns around consumer health, SoFi’s CFO Chris Lapointe said during Mizuho’s 4th Annual Software Summit that its consumer health remains solid.
Highlighting the discussions with SoFi’s CFO, Mizuho Securities analyst Dan Dolev stated, “We were encouraged to learn more about the resiliency of SOFI’s high-FICO borrowers; the company’s hedging measures to manage against rate hikes; its low loan-losses and delinquency rates that fall below pre-COVID levels.”
Dolev added, “Galileo’s unique transaction-based pricing model offering protection against a weaker economy.” The analyst recommends a Buy on SoFi stock, while his price target of $8 implies 49.5% upside potential.
What is the Price Target for SoFi?
SoFi stock is down about 66% year-to-date, which is why the analysts’ average price target of $8.25 implies 54.2% upside potential.
However, analysts remain cautiously optimistic about SOFI stock. It has received six Buy and three Hold recommendations for a Moderate Buy consensus rating. Moreover, SOFI stock scores a nine out of 10 on TipRanks’ Smart Score system.
Bottom Line
While SoFi has not reported profit, it exceeded Street’s expectations on the bottom line in the last four consecutive quarters. As for Q3, analysts expect SoFi to post a loss of $0.11 per share. Further, the continued growth in its membership and product base, growth in personal loans, and low delinquency rates are expected to support its growth.
