SoFi Technologies (SOFI) stock has rallied about 81% year-to-date, driven by continued momentum in the fintech company’s business and a rapidly expanding member base. Despite the ongoing volatility in the broader market, SOFI stock has been essentially flat over the past month, reflecting its resilience in an uncertain macro backdrop. While most analysts acknowledge SOFI’s strong execution and consistent performance, they are divided on the stock amid valuation concerns. Overall, Wall Street’s consensus rating indicates a cautious stance on SOFI stock, with the average price target implying a downside risk.
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Meanwhile, the company recently launched SoFi Crypto, which enables members to buy, sell, and hold dozens of cryptocurrencies, including Bitcoin (BTC-USD) and Ethereum (ETH-USD). SoFi touted that it is the first and only nationally chartered bank offering crypto trading.
Wall Street Is Divided on SOFI Stock
SoFi Technologies yet again reported market-beating results, with its Q3 revenue rising 38% and adjusted earnings per share (EPS) jumping 120%. The Q3 performance was backed by continued growth in SOFI’s member base and the expansion of its product portfolio. SoFi ended the third quarter with 12.6 million members and 18.6 million products, marking a year-over-year growth of 35% and 36%, respectively. Additionally, the company’s strategy to boost its fee-based, high-margin revenue sources is enhancing its position. Moreover, SOFI’s loan business is delivering impressive performance, with Q3 loan originations rising 57% year-over-year to $9.9 billion.
Following the Q3 print, Needham analyst Kyle Peterson increased his price target for SOFI stock from $29 to $36 and reaffirmed a Buy rating. The analyst noted that SoFi’s Q3 revenue and earnings surpassed the Street’s expectations, with continued strength in core on-balance sheet lending. Peterson also noted the faster-than-anticipated expansion in SoFi’s capital-light loan platform business.
Additionally, Peterson noted that SoFi’s credit performance continues to be strong, supported by the company’s disciplined underwriting. The analyst also highlighted SoFi’s plans to help Southwest Airlines (LUV) roll out a co-branded Rapid Rewards debit card, which he believes will further bolster the fintech’s product pipeline and fuel growth in its tech platform. Based on these positives, Peterson expects SoFi to continue to deliver “above-trend” growth while improving profitability.
Meanwhile, Keefe Bruyette & Woods (KBW) analyst Tim Switzer reiterated a Sell rating on SOFI stock but raised his price target from $18 to $20. The analyst highlighted the company’s upbeat Q3 top line and EBITDA (earnings before interest, taxes, depreciation, and amortization), driven by strong loan originations. He also noted that SoFi raised its full-year guidance. Despite the Q3 beat, Switzer remains bearish on SoFi Technologies stock as he believes that the long-term risk/reward profile still doesn’t look attractive.
Is SOFI Stock a Good Buy Now?
Currently, Wall Street has a Hold consensus rating on SoFi Technologies stock based on five Buys, seven Holds, and four Sell recommendations. The average SOFI stock price target of $27.21 indicates 2.2% downside risk.
