In my last article on SoFi Technologies (NASDAQ:SOFI), I discussed how SOFI stock is misunderstood by the market. Nearly a month later, this unfortunately remains the case.
Wall Street and Main Street investors remain “on the fence” at best, bearish at worst, about the fintech firm and neobank. Burned by past price declines, retail traders have ceased to be excited about SOFI. That’s clear, from the fact that shares barely budged during last month’s short-lived “meme wave.”
More fundamentals-focused investors remain worried about SoFi’s valuation, financial health, not to mention skeptical about its long-term prospects.
Yet while SOFI still hasn’t become a hot stock once again, a resurgence in popularity could still arrive relatively soon. At least, when you consider the next big event for the company and for the stock is just a little over a month away.
Why SoFi Stock Is Treading Water Right Now
SoFi is far from an under-the-radar, little-known company, but it can often blend into the woodwork, garnering little attention from the financial press or from investors.
We are currently in one such wave of inconspicuousness with SOFI stock. There haven’t been too many headlines about the digital-first financial services firm since its last quarterly earnings release in late April.
Sell-side analysts like Mizuho’s Dan Dolev, as well as commentators here at InvestorPlace and on other platforms, continue to tout the key takeaways from the previous earnings report, as well as the big potential still inherent with the company.
However, at the same time, SoFi skeptics keep on countering the concerns mentioned above, about valuation, portfolio quality, and whether this company really is “disrupting” the banking space.
After all, despite the banking sector’s staid reputation, banks large and small are also spending heavily on digitization efforts.
This overall mixed view, coupled with a lack of news, will likely keep shares languishing at or near current price levels.
That said, we are fast approaching what may be another big make or break moment for this fintech stock: SoFi’s next quarterly earnings release.
Countdown to a Post-Earnings Liftoff
The next SOFI stock earnings release is expected to occur during the last week of July. You may wonder why I believe SoFi’s Q2 2024 earnings release could prove to be a needle-mover for shares.
My view? As has played out in many of the preceding quarters, SoFi may be able to wow investors with its latest results and updates to guidance.
In prior quarters, SoFi has successfully beat revenue expectations, even as its lending segment experiences a growth slump. Over the past two quarters, the company has reported positive GAAP earnings, beating expectations each time.
In terms of 2024 profitability, SoFi isn’t expected to suddenly become a cash cow. Sell-side forecasts call for earnings of just 8 cents per share for the full year.
Those are scant earnings when compared to SOFI’s $7 per share stock price. Still, if guidance revisions signal far greater profitability through the rest of 2024, and into 2025, this could drive a major sentiment shift.
Why? Investors will become more willing to pay up today, for outsized earnings growth tomorrow. If management’s updates help to assuage past concerns about loan delinquencies, this may also help to shift sentiment back toward bullish.
The Verdict: Buy Before the Short-Term and Long-Term Recovery
Don’t get me wrong. I’m not expecting SOFI to suddenly catapult back to double-digit prices, on the heels of next month’s earnings release. A well-received earnings release could, however, get shares inching back en route to higher prices.
Over the next few quarters, a few more earnings beats, which will clearly indicate that SoFi’s earnings growth will meet, or even beat, expectations, may lead to further gains.
In the years ahead, as the benefits of scale and operating leverage enable SoFi to exponentially increase earnings to levels nearing 75 cents per share, SOFI’s slump could be fully in the rearview mirror, with the stock surging back to $10, $15, or maybe even $20 per share.
Hence, while it continues to sit on the market’s back burner, SoFi stock is a strong opportunity. Consider snapping up a position, before it sizzles back to “hot stock” status.
On the date of publication, Thomas Niel did not hold (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.
