SoFi’s Strong Growth Isn’t Enough For Wall Street — But Retail Calls It ‘Discount Opportunity’

• Needham lowered the price target on SoFi by about 24%, cutting it to $25 from $33 while keeping a ‘Buy’ rating on the shares.
• Morgan Stanley also reduced the price target on the company to $16 from $18 and maintained an ‘Underweight’ rating on the shares. 
• SoFi posted 43% growth in quarterly revenue to $1.1 billion, ahead of Street expectations.

SoFi Technologies Inc. (SOFI) shares are headed for their worst weekly performance in a year after its full-year guidance failed to meet market expectations. The fintech company also received a slew of price target cuts from Wall Street analysts on Thursday.

At least eight analysts lowered price targets on SoFi Technologies, citing a myriad of headwinds despite its strong results. However, retail investors on Stocktwits stayed ‘extremely bullish’ on the company, with some calling the low prices a “discount opportunity.”

SOFI Stock Consensus On Wall Street

Needham analyst Kyle Peterson lowered the price target on SoFi by about 24%, slashing it to $25 from $33 while keeping a ‘Buy’ rating on the shares, according to TheFly. The analyst said that while the company's revenue topped estimates, the lowered target came amid softer-than-expected tech product revenue due to one of its large customers transitioning away.

Morgan Stanley also cut the company's price target to $16 from $18 and maintained an ‘Underweight’ rating on the shares. The firm said that despite robust growth in originations and members, the higher-multiple, capital-light pieces of SoFi slowed meaningfully, and the new Q2 guidance missed expectations.

The financial services firm posted 43% growth in quarterly revenue, which came in at $1.1 billion, ahead of Street expectations. SoFi also added 1.1 million members in the latest quarter, a 35% increase from a year ago. The company’s loan originations also grew to a record $12.2 billion.

Meanwhile, Goldman Sachs lowered SoFi’s price target to $17 from $20 and kept a ‘Neutral’ rating on the shares. The analyst said the latest quarterly results highlighted an unfavorable shift in business mix toward more capital-intensive lending, while higher-quality fee-based segments such as the technology platform declined sequentially, reinforcing concerns about profitability and limited near-term diversification into capital-light revenue streams.

Below is a snapshot of the latest price target updates on the company after its quarterly results, based on data from TheFly. 

According to data from Koyfin, 24 analysts covering SOFI have a 12-month average price target of $22.05, representing an upside of nearly 37% from its previous close.

Eight of these analysts have a ‘Buy’ or higher rating on the company’s shares, while 12 have a ‘Hold’ rating. The rest rate SOFI stock ‘Sell’ or lower.

What’s Retail Saying?

On Stocktwits, retail chatter about SOFI stock stayed at the ‘extremely high’ territory.

One bullish user said the declining price presented a discount opportunity. “New All time high later this year and $45+ next year. That looks pretty good but the further you go out in time the higher they go,” the user added.

Another bullish user said that the company’s business platform would grow to be important. “Noto mentioned on earnings call, got a top 3 telecom company..that's t mobile, verizon level..plus 13 new brands to be announced,” the user said.

A third user said, “the fact that we’re not skyrocketing today back to $19+ shows you just how manipulated the stock is, & how close minded & oblivious mean retailers. However, institutional holding & buying as increased, usually a good sign.”

SOFI stock has gained more than 28% in the last one year.

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