SoFi Technologies’ Share Price Soared 16.16% on Upbeat Q4 Results. Is It a Buy?

The SoFi Technologies Inc (NASDAQ: SOFI) share price soared 16.16% premarket after the fintech company released its Q4 2021 results, beating analysts’ expectations on multiple fronts.

The company’s quarterly loss rose to $111 million from last year’s figure of $82.6 million, but this did not dissuade investors from buying SOFI shares since analysts had predicted a higher loss.

The rally in SOFI stock shows investors are confident in the fintech company’s prospects as it works to become a profitable company.

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SOFI’s revenues rose to $285.6 million, surpassing analysts’ estimates of $279 million while being much higher than the $171.5 million generated in Q4 2020.

Investors ignored the SOFI downgrade to neutral by Bank of America (BofA) analysts due to a more balanced risk-reward setup, indicating that most of the gains may already be baked into the current price.

The fintech company, recently approved to become a national bank, revealed that it added 523,000 new customers in Q4 2021 while adding 906,000 new products.

The bank added that it does not expect the acquisition of Golden Pacific Bancorp Inc. to impact its Q1 2022 earnings significantly and that the acquisition would start having an impact once it starts originating new loans on its new banking platform.

SoFi also acquired a banking software development firm to gain access to its core banking system, which will allow it to transition into a fully-digital national. However, investors barely reacted to the acquisition, despite its significance.

Today’s premarket rally is a good sign that investors are still willing to buy the fintech company’s shares despite the firm being a loss-making entity, which implies that future dilutions of shareholders are pretty likely.

SOFI expects to take a revenue hit of $30 to $35 million from the extended Federal moratorium on student loan repayments until May 1, 2022. The bank forecast total revenues of $1.57 billion with adjusted pre-tax earnings of $180 million, higher than analysts’ estimates of $147 million.

However, the company’s upbeat forecasts include the likelihood of five interest rate hikes this year as predicted by many analysts in light of the record-high inflation levels in the United States.

Chris Lapointe, SoFi Technologies’ CFO, said: “In rising rate environments, our personal-loans business does really well, and we’re seeing that right now, and in lower rate environments, our student-loan refinancing and home-loan refinancing businesses do well. Overall, our diversified model allows us to adjust in real-time and allocate capital to businesses and opportunities that do well in a specific market and macro backdrops.”

SoFi stock price.

SoFi Technologies’ stock price surged 16.16% to trade at $13.01, rising from Tuesday’s closing price of $11.20.