SoFi Technologies (NASDAQ:SOFI), a leading online financial platform, provides diverse services such as personal loans and mortgages. With 44 million U.S. student borrowers, rising personal loan demand is anticipated, benefiting SoFi. Boasting notable growth, it attracted 717,000 new users, signaling a shift in consumer preference towards its services. This growth has important implications for SOFI stock.
Financially, SoFi’s deposits surged from $7.3 billion to $15.7 billion in 2023, reporting a robust $537 million revenue, up 27% year-over. Projected to achieve profitability in Q1 2024, SoFi’s financial strength highlights its strong market position.
Here are some reasons why SOFI stock could continue its successful track record as we head into next year.
Cathie Wood Bought SoFi Again
Cathie Wood, CEO of Ark Invest, recently purchased around 180,000 shares of SOFI stock. The transaction, valued at approximately $1.4 million, increased Ark’s holdings to 1.9 million shares, totaling about $15.3 million.
SOFI stock also garnered support from Jim Cramer, host of CNBC’s Mad Money, who praised CEO Anthony Noto’s performance. In its Q3 earnings report, SoFi disclosed record revenue of $537 million and a significant increase in new members, surpassing 717,000.
Wood’s recent SoFi Technologies share purchase stands out and is one of the reasons why her Ark Funds are outperforming the market this year. Notably, SoFi recently announced is discontinuing its cryptocurrency trading services, perhaps driving institutional interest in this stock.
SOFI Stock Continues Its Bullish Trend
Despite some positive results, SoFi faced challenges that deviated from investor expectations. For instance, in Q3, the company reported a loss of 29 cents per share, widening from the previous year’s loss of 9 cents, leading to skepticism around SOFI stock.
Additionally, SoFi’s role as a secondary underwriter in Instacart’s IPO contributed to its disappointing performance, with SOFI stock exhibiting a downward trend since Instacart’s debut on Sept. 19.
Despite its recent momentum, SOFI stock surged nearly 10% in the past five sessions. Options traders, possibly institutional investors, notably sold 6,206 contracts of the Feb 16 ’24 8.00 Put today.
More Than Just a Student Loan Company
As of September 30, SoFi Technologies held a significant student loan portfolio of $6.04 billion, with a weighted average interest rate of 5.3%. In Q3 2023, it originated nearly $1 billion in student loans, marking a 101% year-over-year increase.
Despite its sizable student loan portfolio, SoFi’s personal loans, totaling $14.85 billion, have seen more substantial growth, with a higher average interest rate of 13.8%. In the same quarter, SoFi originated nearly $3.9 billion in personal loans, more than four times the amount of student loans.
Additionally, regardless of significant GAAP losses, reaching $277 million in the latest quarter, SOFI stock poses a riskier but potentially rewarding investment. If the company can continue to trim its losses over time and grow its top line, this rally can continue.
On the date of publication, Chris MacDonald 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.
