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SoFi Will Beat Earnings on Wednesday, Predicts Oppenheimer

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  • SOFI

The clock is ticking on SoFi Technologies (SOFI).

In less than 48 hours -- on Wednesday, November 10 after close of trading for the day -- the San Francisco-based fintech plans to release its financial results for fiscal Q3 2021. But not content to wait patiently for the news, Oppenheimer analyst Dominick Gabriele published his own predictions for the stock in an earnings preview.

Gabriele, who rates SoFi "outperform" with a $23 price target, expects the company to deliver sales of $254 million. More importantly, he expects that SoFi will report a loss only half as big as what other analysts forecast -- only $0.07 per share. If he's right about that, the reaction from investors could be thunderously positive. (To watch Gabriele's track record, click here)

So what has Gabriele feeling so positive about SoFi? The analyst sees the greatest likelihood of Q3 estimates being exceeded in Lending and Financial Services, with the Tech Platform business being iffier "given onboarding timing" (i.e. it's hard to predict precisely when other companies will sign up to partner with SoFi). Personal loans are expected to rise about 14% from last quarter's level, and student loans, 10%.

Perhaps the biggest potential for outperformance will come from the consumer loans business. Gabriele notes that the personal savings rate in the U.S. has plummeted from nearly 34% back in April 2020 to just 7.5% last month. This "reacceleration," says the analyst, implies "robust consumer" spending in the third quarter, and Gabriele thinks it "likely [that] consumers [were] looking for additional products/services from companies like SOFI" to support that spending.

Longer term, the analyst sees SoFi growing the number of customer accounts it controls from 1.9 million last year to 3.1 million through the end of this year, to 5.5 million next year and eventually 13.7 million by 2024. Granted, some of these accounts will be duplicative (the average consumer owns 5.3 credit accounts, notes Gabriele). Still, the analyst forecasts that from a market share comprising 2% of all borrowers in the U.S. last year, SoFi will grow by nearly half to 3.3% market share this year, 5.8% next year, and more than 14% by 2024.

As customers generate revenue, and revenue turns into profits, Gabriele sees SoFi continuing to lose money this year and next, but turning earnings-positive by 2023, with $180 million in real GAAP net income. By 2024, that number should more than double to $437 million -- and SoFi will be off to the races at last.

Overall, SOFI shares have a Strong Buy rating from the analyst consensus, based on 6 recent reviews that include 5 Buys and 1 Hold. The shares are selling for $21.8 and their $24.9 average price target implies room or a 14% upside potential. (See SOFI stock analysis)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.