The recent selling in high-growth stocks, extension of the student loan moratorium, and headwinds impacting consumer demand have weighed on SoFi (NASDAQ: SOFI). Its stock lost about 55% this year as the extension of the moratorium period will likely weigh on its financials.
Notably, SoFi reduced its 2022 revenue guidance to $1.47 billion from $1.57 billion. Further, it now projects adjusted EBITDA to be $100 million, down from $180 million.
Now What?
While SoFi’s guidance cut is a negative, Mizuho Securities analyst Dan Dolev is not surprised by this move. Further, due to the substantial decline in the stock, Dolev sees the negatives from the extension of the student loan moratorium to be priced in already.
Further, Dolev sees SoFi’s 2022 guidance as conservative and resilient to rising interest rates. The analyst stated, “We believe the FY guide is insulated from aggressive interest rate hikes helped by hedges, potentially more upside from bank-related net interest income, greater holding periods…and forward flow benefits (i.e., a benefit for whole-loan sales because buyers are contractually obligated to buy at a certain price, which provides insulation vs. volatility in the ABS market).”
Dolev is bullish on SoFi stock and raised his full-year revenue and adjusted EBITDA estimates.
Bottom Line
Despite the guidance cut, revenue and EBITDA could continue to grow rapidly. The new revenue guidance represents year-over-year growth of 45%. Further, adjusted EBITDA will likely triple.
While SoFi lowered its full-year outlook, it reiterated its Q1 guidance. SoFi is scheduled to announce its Q1 financials after the market closes on May 10. It expects to deliver adjusted net revenue of $280 million to $285 million in Q1, and projects up to $5 million in adjusted EBITDA.
Despite the short-term headwinds, its growing member and product base provide long-term growth opportunities.
SoFi stock sports a Moderate Buy consensus rating on TipRanks based on seven Buy and five Hold recommendations. The average SoFi price target of $14.41 implies 111% upside potential from current levels.
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