SoFi Technologies shares fall on lowered revenue guidance

SoFi Technologies shares fall on lowered revenue guidance
Published - Apr 7, 2022 @ 4:59 PM (EET)

Financial service provider SoFi Technologies Inc. (NASDAQ:SOFI) lowered its revenue guidance for full-year 2022 on Wednesday after President Joe Biden postponed the suspension date of federal student loan payments from 1 May 2022 to 31 August 2022.

Mr. Biden argued that resuming payments would impose significant economic hardships on borrowers.  Following the news, shares of the company fell 5.4% to $8.28 in the after-hours trading session.

SoFi said it now projects adjusted net revenue of $1.47 billion, lower than the previous guidance of $1.57 billion, assuming that the student loan moratorium won't end in 2022.

The company said adjusted EBITDA is likely to total $100 million, down from its previous forecast of $180 million, while adjusted net revenue in the first quarter would likely remain unchanged

In addition, the company announced that board members Clay Wilkes, Michel Combes, and Carlos Medeiros would be stepping down from their positions at the company's annual shareholder meeting.

Due to COVID-19, SoFi's student loan refinancing business has deeply suffered over the past two years, with the company operating at 50% levels.

"SoFi has done an outstanding job achieving record financial results, member and product growth, and consistent profitability, despite the negative impact of the extended student-loan-payment moratorium." - CEO Anthony Noto, SoFi.


While the digital banking business might be a risky start-up, SoFi has "tremendous upside potential" with its infrastructure business generating "high revenue streams" that offer the company entry into the global fintech market, according to MoffettNathanson analyst Eugene Simuni.

On a GAAP basis, SoFi is still losing money, but as soon as the company adjusted for non-cash expenses like the value of outstanding stock warrants, it will more than break even.

Overall, SoFi holds a Moderate Buy consensus rating.   The average price target of $16.50 implies an upside potential of 93% from current levels.



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