SoFi Technologies surprises with strong quarterly figures and optimistic annual forecast

The shares of SoFi Technologies experienced a remarkable increase of nearly 8 percent in the last hour of trading. This follows a slight decline the previous day after the company presented its third-quarter results. SoFi exceeded analysts' expectations in both diluted earnings per share, which stood at $0.05, and revenues, which amounted to more than $697 million. Additionally, SoFi raised its forecast for the full year 2024. The company now anticipates adjusted net revenue between $2.535 billion and $2.550 billion. The forecast for adjusted EBITDA was also raised to a range of $640 million to $645 million. Prior to the release of the quarterly figures, consensus estimates for adjusted revenue and adjusted EBITDA according to Visible Alpha were still at $2.45 billion and $615 million, respectively, highlighting the positive adjustment of the forecasts. Dan Dolev, an analyst at Mizuho, expressed optimism in a research note, pointing out that 'the bears are confused' and 'the concerns are unfounded.' Historical concerns about SoFi's growth due to capital issues seem unwarranted as the company has enhanced its lending through a capital-efficient platform with strong equity returns. A declining interest rate environment could further benefit SoFi by lowering deposit costs and attracting more loan buyers to the platform, thereby increasing the capacity for loan originations. However, the current valuation of the stock, which trades at over 91 times expected earnings and three times the tangible book value, seems quite high for a personal lender like SoFi. While the technology business with Galileo and Technisys shows potential, growth slowed slightly in the third quarter. Future sales deals could, however, revitalize the business. Finally, a word of caution: According to the Motley Fool Stock Advisor's analyst group, SoFi Technologies is currently not among the top ten stocks for investors. This list includes companies that promise significant returns in the coming years.