SoFi Technologies Inc. (SOFI) saw its stock plunge more than 13% to $15.50 in early Monday trading, despite reporting strong fourth-quarter results and setting ambitious revenue targets for 2025. The market’s reaction was primarily driven by concerns over SoFi’s profitability outlook, overshadowing the positive aspects of their latest earnings report.
In the fourth quarter, the San Francisco-based financial service platform reported earnings of $0.05 per share, surpassing the Street’s consensus estimate by $0.01, with revenues climbing 19.3% year-over-year to $734.1 million, beating expectations of $674.63 million. This growth was supported by record-breaking numbers in member and product additions, with 785 thousand new members and 1.1 million new products added, highlighting strong customer engagement and expansion. Notably, SoFi Money achieved new peaks in accounts, total deposits, and direct deposit members, while also enhancing its service offerings with the introduction of Zelle and improved wire transfer capabilities.
Looking ahead, SoFi’s management provided guidance for the first quarter of 2025, projecting adjusted net revenue between $725 to $745 million and adjusted EBITDA from $175 to $185 million. They also forecasted GAAP net income between $30 to $40 million and GAAP EPS at $0.03. For the full year, expectations are set for adjusted net revenue to reach between $3.200 to $3.275 billion, marking a 23 to 26% year-over-year growth. Adjusted EBITDA is anticipated to be between $845 to $865 million, with a long-term investment philosophy aiming for a 30% incremental EBITDA margin. GAAP net income and EPS are projected at $285 to $305 million and $0.25 to $0.27 per share, respectively.
Despite these impressive figures, investor sentiment leaned towards caution, focusing on the profitability guidance which might not meet the high expectations set by the market. This reaction underscores a broader market trend where investors are scrutinizing fintech companies for not just growth but also for sustainable profitability paths. SoFi’s case illustrates the delicate balance between expansion and profitability in the fast-evolving financial technology sector, where even strong performance in one area can be overshadowed by concerns in another.
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