SoFi Technologies’ shares (NASDAQ:SOFI) are taking a tumble as Compass Point’s analyst Giuliano Bologna flagged a ‘Sell’ initiation on the fintech firm, voicing concerns that capital constraints may limit its growth in fiscal 2024. Bologna suggested that SoFi’s accounting practices for personal and student loans, while beneficial during growth spurts, could lead to an overhang on profit margins if the growth pace decelerates as expected in fiscal 2023 and 2024.
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Bologna underscored the challenge of justifying SoFi’s current stock value, given the probable slowing of balance sheet expansion and an anticipated increase in credit costs. This comes even as SoFi’s stock performance has impressed so far this year, soaring over 79% and leaving the S&P 500’s (SPX) 13% gain in its dust.
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SOFI stock based on seven Buys, eight Holds, and two Sells assigned in the past three months, as indicated by the graphic above. Furthermore, the average price target of $8.60 per share implies 6.3% upside potential.