Why SoFi Technologies stock fell 10% on Monday’s earnings

stock SoFi technology (Sophie -9.53%) It slumped 9.9% as of 12:15pm on Monday, even after the company reported improved performance this morning.

Looking ahead to the first quarter of 2024, analysts forecast that SoFi will post quarterly earnings of $0.01 per share on revenue of $556 million. In fact, profits were double the $0.02 per share expected, and sales were strong at $645 million. But stock prices are still falling.

First quarter performance report

First quarter sales soared 37% year-over-year, which is a good start. SoFi also turned from a loss a year ago to a profit. Total deposits at Internet banks rose 16% to a record $3 billion, and customers now rate a median of “good quality.” FICO With a score of 774, he is a suitable candidate for a loan. (The company’s net interest margin is very high at 5.9%.)

That all sounds great. Where things got worse was on the map.

Is SoFi stock a sell?

Management expects revenue to grow faster than expected in 2024, reaching approximately $2.4 billion, and also to increase earnings by at least $0.08 per share as calculated under generally accepted accounting principles (GAAP). The problem is that while SoFi said its second quarter revenue would be between $555 million and $565 million, Wall Street wants $580 million in revenue.

That seems to have spooked investors, but I don’t think they need to worry. Assuming SoFi hits the low end of its goals this year, revenue will increase 89% and profits will grow even faster. In fact, revenues are expected to triple by 2025 and double again by 2026. By then, the company will be earning nearly $0.50 per share.

Is $7 per share really too much to pay for a stock that earns $0.50? I don’t know about you, but 14x earnings even after two years seems cheap for a fintech growing as fast as SoFi. Investors are selling SoFi stock today, but it really looks like a buy to me.