Since early September, SoFi (SOFI) stock has mostly been trending upwards and appears to have plenty of wind in its sails following an impressive Q3 print.
The company delivered beats on both the top-and bottom-line; revenue grew by 35.5% year-over-year to $272.01 million, $16.38 million ahead of the estimates. The company reported adjusted EBITDA of $10.3 million; the Street was expecting $3.8 million.
Member growth increased by 96% from the same period last year to 2.9 million, with 377,000 new additions in the quarter, amounting to the second-best quarterly uptick ever for the company.
Boasting a 5th quarter in a row of triple-digit growth, Total Products were up by 108% to 4.3 million. Boosted by personal and student loan additions, Lending products saw 15% year-over-year growth, but the biggest increase was reserved for the Financial Services segment, which saw a 179% year-over-year product increase from 1.2 million a year ago to 3.2 million.
Total net revenue for the segment increased from $3.2 million in 3Q20 to $12.6 million in 3Q21, although the figure came in below the $17 million reported in the previous quarter.
Oppenheimer’s Dominick Gabriele expects a “more significant financial services segment revenue ramp in 2022,” as “product adoption continues and engagement/cross-sell leads to higher annual ARPU.”
“Commentary also suggests SOFI to focus on 30% incremental margin which signifies better investment opportunities than originally forecasted,” the analyst went on to say. “We think this should lead to further revenue growth but lower EBITDA dollars than previously expected up front. We expect SOFI to run with less debt than previously expected.”
The company also raised its Q4 Adj. net revenue guidance to between $272-282 million, and due to anticipating “higher revenue/less expected debt load,” Gabriele believes a price target hike for the stock is in order.
The figure rises from $23 to $28, indicating upside potential of ~20% from current levels. Needless to say, Gabriele’s rating stays an Outperform (i.e. Buy). (To watch Gabriele’s track record, click here)
Looking at the consensus breakdown, barring one skeptic all 5 other recent SOFI reviews are positive, culminating in a Strong Buy consensus rating. The average price target comes in at $25.58, implying investors will see returns of 10% over the one-year timeframe. (See SoFi stock analysis 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.
