TLDR
- SoFi stock has jumped over 220% year-over-year, with Q3 earnings report expected within three weeks potentially serving as a catalyst for more gains.
- The company added 850,000 new members in Q2, driving adjusted net revenues to $858 million, a 44% increase from the prior year.
- Management raised full-year guidance for revenue to $3.375 billion and adjusted EPS to $0.31, exceeding previous targets.
- The firm projects 2026 earnings per share between $0.55 and $0.80, but current Wall Street consensus sits at the lower end of this range.
- SoFi’s shift toward higher-margin financial services and tech products is expected to support continued earnings beats and margin expansion.
SoFi Technologies has delivered impressive returns for shareholders this year. The stock is up more than 220% on a year-over-year basis.
The company’s Q3 earnings report is scheduled for release in less than three weeks. Technical indicators suggest the stock is testing support levels ahead of this announcement.
SoFi added 850,000 platform members during the second quarter alone. This growth pushed adjusted net revenues to $858 million, representing a 44% jump from the same period last year.
The company beat analyst expectations by roughly 6.7% in Q2. This beat exceeded the average magnitude seen in recent years.
Management achieved adjusted EBITDA margins of 29% and net earnings margins of 11%. The firm broke even just a few quarters ago, making margin expansion difficult for analysts to predict.
The company’s executives raised full-year guidance following strong Q2 results. They now expect adjusted net revenue of approximately $3.375 billion, up from prior guidance of $3.235 billion to $3.310 billion.
This represents year-over-year growth of about 30%. The previous guidance called for 24% to 27% growth.
Adjusted EBITDA guidance increased to $960 million from $875 million to $895 million. Adjusted EPS guidance rose to $0.31 from $0.27 to $0.28.
Analyst Estimates Trail Management Projections
Wall Street raised its consensus estimates following management’s updates. However, analysts didn’t increase estimates by much.
Management targets revenue growth above 25% annually from 2023 to 2026. Current consensus estimates show 27.24% growth, aligning with management’s goals.
The company expects EPS between $0.55 and $0.80 for fiscal 2026. Wall Street consensus sits at the lower end of this range.
Analysts appear conservative given the company’s limited history as a profitable business. The firm lacks enough historical data for conventional analysis.
SoFi’s lending platform business generated $2.4 billion in originations on behalf of others in Q2. This figure increased from $1.6 billion in the prior quarter.
Revenue Mix Shifts to Higher Margins
The company is shifting its revenue mix toward financial services and tech sales. These segments typically deliver higher margins than lending operations.
Wall Street expects $0.08 in EPS for Q3, one cent below Q2 performance. The company posted 33% quarter-over-quarter EPS growth in Q2.
SoFi’s digital banking emphasis and products like cryptocurrency trading have attracted investor interest. The firm’s user-friendly technology continues to drive member growth.
The stock’s forward price-to-earnings ratio stands near 80x for the next year. On a two-year forward basis, the ratio drops to 36-37x.
If management delivers on the higher end of its 2026 EPS range, the stock could reach $32 per share. This target implies over 26% upside from current levels.
The company faces risks common to financial institutions, including macroeconomic and political factors. Valuation concerns persist given the premium multiples.
Some analysts express concern about high valuations and potential risks. The stock’s year-to-date performance shows a 78.63% gain with average daily volume of nearly 70 million shares.
Market capitalization now stands at $29.92 billion. Technical indicators currently flash a buy signal.
Management expects continued growth and momentum in both Q3 and Q4 across its business segments.
