SoFi Technologies (NASDAQ:SOFI) stock has been on the backfoot for most of the year, with the shares down by 30%. The downtrend further continued after the neo bank released its Q1 results late last month, even after the company beat expectations on both the top-and bottom-line, as investors weren’t thrilled about the less-than-promising Q2 outlook.
Investor Yiannis Zourmpanos also suggests that the sell-off reflects growing concerns about deteriorating macroeconomic conditions, particularly impacting the company’s lending operations.
But as is often the case, according to Zourmpanos, the lower share price now presents an opportunity for investors.
“With solid performance and strategic positioning, SoFi promises substantial growth, making it a compelling long-term investment,” says the investor. “Despite a recent 2% drop in lending segment revenues and a cautious outlook for 2024, SoFi’s fundamental business shifts and potential Fed rate cuts suggest strategic positioning for future growth.”
While SoFi offered a lacklustre forecast for Q2, it did raise its FY 2024 guide, which Zourmpanos thinks shows “confidence in continued robust performance and strategic growth initiatives.”
The company also saw 622,000 new member adds as the total customer base climbed to 8.1 million, representing a 44% year-over-year uptick. Zourmpanos notes that the significant increase in new members accounts for the rise in consumer deposits reaching an all-time high of $3 billion.
Moreover, the increase in new member additions can be linked to, among other factors, the diverse range of products offered by SoFi. In Q1, SoFi saw 989,000 new product additions, with 93% of these products falling under the Financial Services segment.
There’s another explanation for the 620k+ new member adds in the recent quarter. SoFi has a “mobile-first approach,” a strategy that appeals to the younger generation. “By offering many different products and services on an app, SoFi has succeeded in cross-selling at a high rate,” Zourmpanos explained. “Focusing on the long-term horizon, SoFi is a solid buy amid the depressed price action and solid underlying fundamentals.”
Accordingly, Zourmpanos rates SOFI shares a Strong Buy. (To watch Zourmpanos’s track record, click here)
That is a more upbeat take than the general view on Wall Street. The stock only claims a Hold consensus rating, based on a mix of 10 Holds, 5 Buys and 3 Sells. The forecast calls for 12-month returns of 28%, considering the average price target stands at $8.91. (See Sofi stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
