SoFi Technologies, Inc. (NASDAQ: SOFI) Stock Review
If you’re considering a stock buy, you may want to take a look at SoFi Technologies, Inc. (NASDAQ: SOFI). Based in San Francisco, California, SoFi offers a variety of financial products and services including auto loans, mortgages, personal loans, and investing. It also offers banking services via a mobile app.
SoFi’s growth in revenue is expected to be 40% in 2022
This growth is expected to come in two forms, the first from SoFi’s own products, and the second from revenue from other companies. With its bank charter, SoFi will be able to lend to customers, and the integration of Galileo and Technisys should allow it to generate additional revenue from other financial companies. As such, SoFi will be generating revenue from two fronts in 2022 and 2023, with revenue generated by products sold to SoFi members and from advisory fees paid to other financial companies.
The company is also seeking stockholder approval for the restatement and amendment of its 2021 Stock Option and Incentive Plan. The restatement and amendment will be effective upon the closing of the Business Combination.
It is expected to generate $200M in adjusted EBITDA in 2023
SoFi is expecting to generate $200M in adjusted EBITDA by FY 2023, a near doubling of its current profits. The company is not cheap, but the growth trajectory is impressive. The company has grown at a high double-digit rate in the past. Its revenues in FY 2021 were boosted by the COVID-19 pandemic.
The rate of growth in personal loan originations will continue to be a key driver of SoFi’s earnings. In the first half of FY 2022, the company saw a 9% YoY increase in personal loan originations. However, student loan originations contracted -43% YoY and -29% QoQ, causing SoFi’s adjusted EBITDA to decrease.
It is expected to generate 6-7% in adjusted EBITDA margin in 2023
The company is well-positioned for further growth and is expected to generate an adjusted EBITDA margin of six percent to seven percent in 2023. However, it will be a difficult proposition for investors to make a profit with this stock as it is expected to show some short-term volatility. Investors may opt to use the buy and hold strategy. However, investors should be aware of the inflation risk and rising interest rates, which will affect the fixed rate lending segment of SoFi.
Adjusted EBITDA for the year ended 31 December 2018 was EUR 98.1 million, down from EUR 102 million a year ago. This result is partly attributable to higher revenue from audiobooks, with listening hours increasing by 87% and downloads of e-books up 21.9%. The company’s Book segment had a negative impact in the year due to the lockdown period. Despite the deteriorating trend, grants received during the lockdown period helped offset some of this negative impact.
It is executing its financial plan to become a more robust and sound financial services company
SoFi Technologies has been making progress with its financial plan to become a more stable and financially sound company. The company has made acquisitions and filed for a national bank charter. It also has an agreement to acquire Golden Pacific Bancorp by March 2021. The bank charter would make it easier for SoFi to provide its customers with loans and deposit accounts. It would also lower its cost to lend money. That would be good news for SoFi’s account holders and borrowers alike.
For the first quarter of 2022, SoFi’s financial results surpassed expectations. The company’s contribution profit in its Lending segment increased 51% to $133 million. Additionally, its contribution margin of adjusted net revenue rose to 54%. These advancements were driven by the company’s continued strong demand for its Lending products, new efficiencies, and its high credit underwriting standards.