It’s been a miserable year for investors in digital personal finance company SoFi Technologies (SOFI). Shares have shaved off a harrowing 61% of value since 2022 entered the frame as investors have turned their backs on high-growth stocks, driven away to safer havens by a mix of rising inflation, the prospect of interest rate hikes, Russia’s invasion of Ukraine and more specific company-related headwinds.
The stock might be heading in one direction only, but promisingly, with Q1 earnings anticipated on May 10, one trend is pointing in the other direction. Namely, website traffic, which is up considerably.
From 4Q21 to 1Q22, total Unique Visitors (UVs) have increased by 52% – from 20.4 million to 31 million. And compared to last year, the growth is even more impressive — 417%.
Will that be enough to deliver a strong performance? That remains to be seen although it certainly bodes well and could act as a counterbalance to a recent bearish development.
Earlier this month, the company updated its full year 2022 guidance after President Biden prolonged the federal student loan payment moratorium until the end of August (from the previous May 1 deadline). A large amount of SOFI’s revenue is generated from the refinancing of educational debt and these were downward revisions. With the fall midterm elections looming, the company also expects the moratorium will continue beyond August and into next year.
While Wedbush’s David Chiaverini says the extension “represents a temporary headwind,” the analyst sees plenty of reasons to stay upbeat.
He writes, “Increasing brand presence should drive member growth; its integrated technology platform (Galileo) is a competitive advantage that allows for a seamless cross-buying experience aimed at a digitally native younger cohort; it has strong unit economics across its products; we expect credit quality to be stronger than peers given its borrowers are at the higher end of the credit spectrum with an average FICO of ~750; and the recently approved bank charter should accelerate earnings growth, in our view.”
As such, Chiaverini rates SOFI stock an Outperform (i.e., Buy) and his $15 price target makes room for 12-month growth of 134%.
What does the rest of the Street have in mind for SoFi? It’s a mixed bag; with 7 Buys and 5 Holds, the analyst consensus rates this stock a Moderate Buy. That said, the average target is an optimistic one, and at $14.86, is practically the same as Chiaverini’s objective. (See SoFi stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
