Investor sentiment around SoFi Technologies Inc
The San Francisco-based company reported its first-ever positive EPS and a 3.98% surprise on revenue. However, investor sentiments appear to be particularly driven by the management's outlook with respect to growth estimates moving forward.
Over the medium term, SoFi management expects 20-25% Revenue CAGR over 2023-2026. This implies a 50% compound growth on Financial services revenue, mid-20% compound growth for its Technology platform's revenue and mid-teens compound growth for the business' Lending segment.
Management, led by SoFi CEO Anthony Noto, foresees the business delivering 20-25% EPS growth beyond 2026, reflecting core business strength plus added benefit from any new business lines launched during the 2024-2026 period.
The results along with the bullish outlook did their job well to boost investor sentiment.
SoFi stock's RSI is still not in the overbought zone (over 70). It may not be the profit-taking opportunity some may be curious about.
Bullish sentiments for SoFi stock were also seen reflected across platforms such as Reddit and X.
The Stock's Valuation May Take Its Time To Make Sense
While SoFi stock currently trades at really high valuations (153.95 P/E), forward valuations for the stock 2-3 years down the line, are better placed given the anticipated growth in earnings. Earnings growth has just begun for SoFi stock and if the company is able to deliver per management's expectations, over the long-term, valuations would make more sense, and probably benefit those who identified the early trend.
