Fintech company and digital bank SoFi Technologies (SOFI) is scheduled to announce its results for the second quarter on July 29. SOFI stock has rallied 40% year-to-date, as the company continues to impress investors with its solid financials, supported by an expanding member base. While several analysts acknowledge SoFi’s strong fundamentals, they are cautious about the stock, as they believe the positives are already priced in. Wall Street’s average price target indicates downside risk from current levels.
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Expectations from SOFI’s Q2 Earnings
SoFi Technologies reported a 20% growth in its Q1 revenue and the sixth consecutive quarter of GAAP profitability. The company ended the quarter with 10.9 million members, marking an impressive 34% growth. Investors will be keen to see if that momentum continued in the second quarter.
They would also pay attention to the strength in SoFi’s Financial Services segment, its fastest-growing division, which includes offerings like SoFi Money, Loan Platform Business (LPB), and SoFi Invest. The company is growing beyond its traditional lending business by aggressively shifting to fee-based revenue.
Analysts expect SOFI’s Q2 revenue to increase by more than 34% to about $804.2 million, while earnings per share (EPS) is estimated to jump to $0.06 from $0.01 in the prior-year quarter.
Analysts’ Views Ahead of SoFi’s Q2 Earnings
Heading into Q2 results, Goldman Sachs analyst Will Nance initiated coverage of SoFi Technologies stock with a Hold rating and a price target of $19. The analyst noted the company’s impressive growth story in the neobank space, its focus on diversification, and the strength of the company’s LPB offering. That said, Nance contends that at 5.0x tangible book value, SOFI stock seems “somewhat disconnected” from the return profile of the business. The analyst is also concerned about SoFi’s unique fair value accounting for its lending business, which pulls forward earnings.
Recently, Keefe, Bruyette & Woods analyst Timothy Switzer increased the price target for SoFi Technologies stock to $13 from $9, but reaffirmed a Sell rating. The analyst noted strong catalysts that drove SOFI stock higher in recent months, mainly the pending revenue opportunities from the recently announced re-entry into crypto trading and significantly expanded student lending opportunity following the passage of U.S. President Donald Trump’s “Big, Beautiful Bill.”
Despite SoFi’s exciting growth prospects and strong value proposition, Switzer remains bearish on SOFI stock, as he believes that it has moved beyond its fundamental value.
Is SOFI Stock a Buy, Sell, or Hold?
Overall, Wall Street is cautious on SoFi Technologies stock, with a Hold consensus rating based on five Buys, eight Holds, and three Sell recommendations. The average SOFI stock price target of $17.08 indicates a downside risk of about 21% from current levels.
