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SoFi Technologies Rises 57% YTD: How Should You Play the Stock?
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SoFi Technologies’ (SOFI - Free Report) stock has soared 56.8% in the year-to-date period, outperforming the 23.5% rally of the industry it belongs to and 27.1% growth of the Zacks S&P 500 composite.
The company’s shares have significantly outpaced its competitor Joint Stock Company Kaspi.kz’s (KSPI - Free Report) 13.4% rise and Ally Financial Inc.’s (ALLY - Free Report) 11.4% gain over the same period.
YTD Price Performance
Image Source: Zacks Investment Research
As of the last trading session, SoFi Technologies’ stock price closed at $15.6, marginally below its 52-week high of $15.75. Also, it is trading above its 50-day moving average, suggesting a bullish sentiment among investors.
Given the recent strength in SOFI, investors might be hell-bent on buying its shares. Let us evaluate whether this is the right time to purchase SoFi Technologies’ stock.
Product Growth Boosts SOFI’s Top Line
SOFI’s rapid growth is driven by its innovative product assortments, which include features or services. In the third quarter of 2024, the company had 13.7 million in total products, a 31% jump from the year-ago quarter and 7% growth from the preceding quarter. SoFi Technology is witnessing a surge in members over the years.
In the third quarter of 2024, the company added more than 756,000 members, making the total number of members 9.4 million. This marks a 35% hike from the year-ago quarter and a 6.8% rise from the previous quarter.
Looking at a broader horizon, we find that the number of lending products in the third quarter of 2024 rose 19% on a year-over-year basis. It is mainly fuelled by continued demand for personal loan products, and a steady rise in student and home loan products. In the third-quarter 2024, the company witnessed 23% year-over-year growth in its loan origination volume.
Apart from the lending segment, SoFi Technologies' growth can be attributed to financial services products to a large extent. In the third quarter of 2024, the total number of financial services products was 11.8 million, a 33% rise from the year-ago quarter.
Finally, the technology platform segment, which is the smallest of the three segments of the company, witnessed a 14% year-over-year rise in its revenues in the third quarter of 2024. This segment generates the lowest proportion of the company’s top line. However, coupled with the other segments, it becomes a key player in SOFI’s transformation.
Cross-Selling Efforts to Make SOFI Shareholder-Favorite
SoFi Technologies has witnessed a remarkable rise in its total members in the third quarter of 2024 and across the past quarters, which indicates a solid foundation to capitalize on cross-selling opportunities. The number of products has increased in the lending and financial segments, highlighting management’s efforts to make the company a “one-stop-shop” for its members.
Management is keen on innovating and creating a product pipeline. Vision as such gels well with the commitment to improve SOFI’s value proposition, which is the core driver of the company’s cross-selling potential. We believe that maximizing cross-selling potential will help create long-term value for shareholders.
SoFi Technologies’ Stock Valuation Beats Industry
If we look at the Price/Earnings (PE) ratio, SoFi Technologies’ shares trade at 57.48X forward earnings at present compared with the industry’s 16.77X. Moving on to EV-to-EBITDA, SOFI is trading at 27.31X, greater than the industry’s 10.65X. Such a valuation might urge investors to expect higher earnings growth in the long run. It also implies that the market is willing to pay a premium for the company’s current earnings position, believing it will grow further in the future.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
SOFI’s Strong Top & Bottom-line Prospects
The Zacks Consensus Estimate for SOFI’s 2024 sales stands at $2.5 billion, indicating year-over-year growth of 21.9%. Revenues for 2025 are anticipated to grow 18.7% year over year.
The consensus mark for the company’s 2024 earnings stands at 12 cents per share, suggesting a rise from the loss of 36 cents per share reported in 2023. For 2025, the bottom line is estimated to grow more than 100% on a year-over-year basis.
SoFi Technologies’ Northward Estimate Revisions
Six estimates for 2024 have moved north in the past 60 days versus no southward revision, reflecting analysts’ confidence in the company. The Zacks Consensus Estimate for 2024 earnings has moved up 20% in the past 60 days.
Now is the Best Time to Buy SOFI
SoFi Technologies serves as a profitable investment opportunity. The company’s growth is driven by its innovative products across different segments, likely fuelling its top line. Its cross-selling potential, strong valuation, and promising top and bottom-line prospects indicate continued success.
We suggest investors to buy the stock now as we expect the stock price to increase further on the back of innovative approaches taken to make the company a one-stop-shop, its positive outlook and upward estimates that reflect analyst optimism.
Image: Bigstock
SoFi Technologies Rises 57% YTD: How Should You Play the Stock?
SoFi Technologies’ (SOFI - Free Report) stock has soared 56.8% in the year-to-date period, outperforming the 23.5% rally of the industry it belongs to and 27.1% growth of the Zacks S&P 500 composite.
The company’s shares have significantly outpaced its competitor Joint Stock Company Kaspi.kz’s (KSPI - Free Report) 13.4% rise and Ally Financial Inc.’s (ALLY - Free Report) 11.4% gain over the same period.
YTD Price Performance
As of the last trading session, SoFi Technologies’ stock price closed at $15.6, marginally below its 52-week high of $15.75. Also, it is trading above its 50-day moving average, suggesting a bullish sentiment among investors.
Given the recent strength in SOFI, investors might be hell-bent on buying its shares. Let us evaluate whether this is the right time to purchase SoFi Technologies’ stock.
Product Growth Boosts SOFI’s Top Line
SOFI’s rapid growth is driven by its innovative product assortments, which include features or services. In the third quarter of 2024, the company had 13.7 million in total products, a 31% jump from the year-ago quarter and 7% growth from the preceding quarter. SoFi Technology is witnessing a surge in members over the years.
In the third quarter of 2024, the company added more than 756,000 members, making the total number of members 9.4 million. This marks a 35% hike from the year-ago quarter and a 6.8% rise from the previous quarter.
Looking at a broader horizon, we find that the number of lending products in the third quarter of 2024 rose 19% on a year-over-year basis. It is mainly fuelled by continued demand for personal loan products, and a steady rise in student and home loan products. In the third-quarter 2024, the company witnessed 23% year-over-year growth in its loan origination volume.
Apart from the lending segment, SoFi Technologies' growth can be attributed to financial services products to a large extent. In the third quarter of 2024, the total number of financial services products was 11.8 million, a 33% rise from the year-ago quarter.
Finally, the technology platform segment, which is the smallest of the three segments of the company, witnessed a 14% year-over-year rise in its revenues in the third quarter of 2024. This segment generates the lowest proportion of the company’s top line. However, coupled with the other segments, it becomes a key player in SOFI’s transformation.
Cross-Selling Efforts to Make SOFI Shareholder-Favorite
SoFi Technologies has witnessed a remarkable rise in its total members in the third quarter of 2024 and across the past quarters, which indicates a solid foundation to capitalize on cross-selling opportunities. The number of products has increased in the lending and financial segments, highlighting management’s efforts to make the company a “one-stop-shop” for its members.
Management is keen on innovating and creating a product pipeline. Vision as such gels well with the commitment to improve SOFI’s value proposition, which is the core driver of the company’s cross-selling potential. We believe that maximizing cross-selling potential will help create long-term value for shareholders.
SoFi Technologies’ Stock Valuation Beats Industry
If we look at the Price/Earnings (PE) ratio, SoFi Technologies’ shares trade at 57.48X forward earnings at present compared with the industry’s 16.77X. Moving on to EV-to-EBITDA, SOFI is trading at 27.31X, greater than the industry’s 10.65X. Such a valuation might urge investors to expect higher earnings growth in the long run. It also implies that the market is willing to pay a premium for the company’s current earnings position, believing it will grow further in the future.
SOFI’s Strong Top & Bottom-line Prospects
The Zacks Consensus Estimate for SOFI’s 2024 sales stands at $2.5 billion, indicating year-over-year growth of 21.9%. Revenues for 2025 are anticipated to grow 18.7% year over year.
The consensus mark for the company’s 2024 earnings stands at 12 cents per share, suggesting a rise from the loss of 36 cents per share reported in 2023. For 2025, the bottom line is estimated to grow more than 100% on a year-over-year basis.
SoFi Technologies’ Northward Estimate Revisions
Six estimates for 2024 have moved north in the past 60 days versus no southward revision, reflecting analysts’ confidence in the company. The Zacks Consensus Estimate for 2024 earnings has moved up 20% in the past 60 days.
Now is the Best Time to Buy SOFI
SoFi Technologies serves as a profitable investment opportunity. The company’s growth is driven by its innovative products across different segments, likely fuelling its top line. Its cross-selling potential, strong valuation, and promising top and bottom-line prospects indicate continued success.
We suggest investors to buy the stock now as we expect the stock price to increase further on the back of innovative approaches taken to make the company a one-stop-shop, its positive outlook and upward estimates that reflect analyst optimism.
SOFI presently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.