Stocks to buy

2 Reasons to Be Optimistic About SOFI Stock

Despite challenges, SoFi Technologies (NASDAQ:SOFI) stock thrived in 2023, rising 85% on record revenue and member growth. The end of student loan forbearance boosted earnings, and SoFi stock 480,000 members and 847,000 products in Q3, showcasing effective cross-selling and customer retention.

Banking, an age-old industry, has evolved significantly with technological advances disrupting various sectors. SoFi, recognizing the importance of adaptability, provides a fully digital banking experience. Its user-friendly interface simplifies financial tasks, addressing customer pain points, and aligning with modern preferences.

Soon to Be a Banking Giant

SoFi’s growth is attributed to its financial services productivity loop, emphasizing cross-selling and upselling. In Q3, 67% of revenue growth came from nonlending segments, showcasing the success of expanding beyond core lending. The diversified business approach safeguards against challenges, notably in a high-interest-rate environment.

SoFi’s banking services garnered $2.9 billion in new deposits, crucial for funding $5.2 billion in loan origination. Financial services sales surged 142%, contributing to a 27% overall revenue growth in Q3. Adjusted EBITDA increased 121% year-over-year, and the net loss per share (excluding a one-time charge) was $0.03. Management reaffirmed expectations for a net profit in the fourth quarter of 2023.

Positive Outlook This Jan. 29

For Q1 2024, analysts predicted SoFi’s revenue at $576 million, a 25.1% year-over-year increase, and a GAAP EPS loss of one cent. Full-year 2024 forecasts indicate profitability, with a GAAP earnings per share estimate of 6 cents and total revenue of $2.522 billion, up by 22.7% year-over-year. 

Last quarter, CEO Anthony Noto emphasized the nonlending segment as the growth catalyst. Results will be revealed on Jan. 29. SoFi aims for its first profit in Q4, but analysts expect a breakeven. BMO Capital initiated coverage with a $9 target, while Barclays maintained Equal Weight with a raised target of $10.

SOFI is Definitely a Buy

Since the resumption of student loan payments, SoFi stock, anticipates increased loan demand. Up 121% at $9.95, it’s a top fintech pick poised to potentially double in 2024. Purchasing below $10 offers a significant upside. As a financially stable business headed towards profitability, management anticipates a 2024 profit, maintaining positive growth momentum.

SoFi thrived, accumulating $15.7 billion in Q3 deposits. With 717,000 new users, the CEO aims for a million quarterly additions in 2024. Q4 results hold stock boost potential. Positioned for major growth, SoFi is set for a promising 2024, making it a potential high-growth fintech stock to consider at current levels.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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