SoFi Technologies (NASDAQ:SOFI) stock has strong comeback potential, but be careful. Required federal student loan repayments resumed in October, and that’s certainly good news for SoFi Technologies. However, you’ll definitely want to conduct your due diligence on SoFi’s financials before making any investment decisions.
October certainly was a good month for SoFi Technologies. For instance, SoFi agreed to “place a $375 million personal loan securitization exclusively with funds and accounts managed by” BlackRock (NYSE:BLK) investment advisors.
It’s encouraging to see a banking giant like BlackRock forge a partnership with SoFi Technologies. Plus, there’s other positive news to report — but don’t get too excited, as one startling stat will put SoFi’s accomplishments into perspective.
Student Loan Repayments Give SoFi Technologies a Boost
At first glance, SoFi Technologies’ third-quarter 2023 financial report looks like nothing but good news. The most notable statistic is that SoFi reported $919.3 million in student loan originations “as borrowers prepared to resume student loan payments in October.” That figure is far above Wall Street’s forecast of $651.5 million in student loan originations.
Furthermore, SoFi Technologies announced that its total deposits grew 23% quarter over quarter to $15.7 billion. Clearly, the deposit outflow concerns of early 2023 aren’t a major issue for SoFi Technologies now.
All in all, SoFi Technologies demonstrated solid top-line growth in Q3 2023 with $537.2 million in GAAP-measured total net revenue, up 27% year over year. That’s certainly a valid bragging point for SoFi, which even the company’s harshest critics should acknowledge.
Why You Need to Be Careful With SOFI Stock
At this point, you might be tempted to load the proverbial boat on SOFI stock. After all, SoFi Technologies is a legitimate bank with a BlackRock partnership and growing revenue.
But hold on. Even if SoFi Technologies is a legitimate lender, you don’t want to treat the company like a large financial institution. SoFi is still developing as a business and the company’s financials aren’t perfect.
For Q3, SoFi Technologies reported an adjusted earnings loss of 3 cents per share. That’s better than Wall Street’s forecast of an earnings loss of 8 cents per share. Yet, that’s not the statistic that should concern prospective investors.
Here’s what caught my attention in SoFi Technologies third-quarter report. SoFi Technologies’ GAAP-measured net earnings loss widened 259%, from $74.2 million in the year-earlier quarter to $266.7 million in Q3 2023.
Sometimes, the per-share earnings data doesn’t tell the full story. In this case, it’s evident that SoFi Technologies still has work to do. Going forward, investors should closely monitor SoFi’s bottom-line stats for signs of improvement.
SOFI Stock Is Still Worth Owning
Overall, SoFi Technologies’ third-quarter report was positive. Moreover, SoFi’s collaboration with BlackRock adds a sense of legitimacy to SoFi Technologies.
Just be sure to conduct your full due diligence on SoFi Technologies’ financials before considering an investment in the company. When all is said and done, the best policy is to take it slowly and start with a very small position in SOFI stock.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
