SOFI - SoFi Technologies' Growing Profitability Makes It A Buy On The Q4 Pullback
2024-02-05 15:17:17 ET
Summary
- SoFi Technologies has achieved GAAP profitability in the fourth quarter of 2023, with $47.913 million in net income.
- The stock initially rose 20% in response to the earnings report.
- The company shows an ability to produce excellent fundamentals in challenging or volatile environments.
When I last wrote about SoFi Technologies, Inc. ( SOFI ) on February 17, 2022, I called it a speculative investment because it was an unprofitable, free cash flow ("FCF") burning, experimental fintech that had only recently received its banking charter. Additionally, I made that buy recommendation on the eve of the Federal Reserve raising interest rates, which I knew would likely put the new online bank under stress. I still recommended it because I believed it would be a long-term winner. However, in the short term, the stock suffered as investor sentiment shifted against fintechs amid the collapse of Silicon Valley Bank, Silvergate Bank, and Signature Bank. Even at the height of the stock's recent post-earnings rally at $9.45, the price was still down 26.8% from the price I recommended the stock. SoFi's stock has since given up most of its post-earnings gains. The current price of $7.88 is down 38.96% from the day of my recommendation versus the S&P 500, which is up 11.28%.