SOFI Stock Posts Best Day In 18 Months: Wall Street Analyst Says Focus Now On How Well Growth Holds Up

Shares of SoFi Technologies Inc. (SOFI) experienced their most significant gain in a year and a half, driven by impressive results from the third quarter that exceeded market expectations. Following these results, analysts are now focusing on the sustainability of SoFi's growth trajectory.

Andrew Wang, managing partner at Runnymede Capital Management, emphasized in an interview with Schwab Network that the attention should shift from the pace of SoFi's growth to the durability of that growth. While he noted that the increase in personal loans and improved credit metrics were positive indicators, he cautioned that "rapidly growing loan books do take time to reveal their full losses."

SoFi reported adjusted net revenue of $1.37 billion for the third quarter, marking a 44% increase from the previous year and surpassing analysts' forecasts. The company’s adjusted earnings per share (EPS) rose to $0.18, up from $0.11 a year prior, also exceeding expectations. The total loan originations for the quarter reached a record $16.9 billion, a substantial 71% increase, with personal loans accounting for $12.6 billion. Additionally, the volume of student loans nearly doubled to $2.9 billion, setting a new high for the company. Revenue from the lending segment climbed 68% on an adjusted basis to $807.4 million.

During the quarter, SoFi also welcomed a record 1.2 million new members, bringing its total membership to 17.1 million, which reflects a 35% year-over-year increase. The company reported that its total number of products grew by 44%, reaching 26.7 million.

Looking ahead, SoFi management has set a robust outlook for the next year, projecting an adjusted EPS of approximately $0.90, which is nearly 48% higher than its target for 2026. Furthermore, the company anticipates an increase in adjusted net revenue of about 27%, reaching $6.4 billion by 2027.

However, Wang pointed out that the coming year will present more challenging comparisons for SoFi, despite the optimistic projections from management. He highlighted the importance of the broader economic environment, stating, "Lower inflation, with healthy employment, could help borrowers. Lower inflation because the economy is weakening is a different story." Wang stressed that the key question for SoFi will be whether borrowers continue to make payments and whether earnings can sustain growth as the business matures.

Keith Buchanan, a partner and senior portfolio manager at Globalt Investments, remarked on SoFi's distinctive position within the fintech sector, particularly regarding its customer acquisition strategies. This unique approach may contribute to its resilience in the competitive financial landscape.

As SoFi continues to expand its offerings and membership base, the focus now shifts to how effectively it can maintain this momentum in the face of potential economic pressures and evolving market conditions.