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On Tuesday, Goldman Sachs reaffirmed its Neutral stance on SoFi Technologies stock (NASDAQ:SOFI), maintaining a price target of $9.50. Following the release of the company's fourth-quarter results for the year 2024, which surpassed expectations, Goldman Sachs analyst Michael Ng provided insights into SoFi's performance and future outlook. The stock, currently trading at $16.08, has shown remarkable momentum with a 111% return over the past year, according to InvestingPro data. SoFi reported an EBITDA of $198 million, which was higher than both Goldman Sachs and consensus estimates of $191 million and $180 million, respectively. This outperformance was attributed to stronger-than-anticipated profits from the Lending division. The company's financial health appears solid, with InvestingPro analysis showing strong revenue growth of 32.15% and a healthy gross profit margin of 82.64%. Subscribers to InvestingPro can access 10+ additional key insights about SoFi's financial performance and outlook.
SoFi also provided revenue guidance for the year 2025, projecting figures between $3.200 billion and $3.275 billion. This forecast indicates a year-over-year growth of 23-26%, outpacing the consensus estimate of $3.06 billion. The expected growth is driven by a 60-65% increase in Financial Services due to new product launches and improved monetization, and a steady growth in Lending and Technology Platform segments.
Despite the positive revenue outlook, SoFi's EBITDA projections for 2025 fell short of the consensus, with the company expecting to achieve between $845 million and $865 million compared to the anticipated $914 million. Based on InvestingPro's Fair Value analysis, the stock appears to be trading above its intrinsic value, though the company maintains a "GOOD" overall financial health score. A comprehensive analysis of SoFi's valuation and growth prospects is available in InvestingPro's detailed research report, part of their coverage of 1,400+ US stocks. The lower EBITDA guidance is a result of SoFi's strategic investments in expanding its financial services products, including offerings such as SoFi Plus, Invest, small and medium business (SMB) lending capabilities, Protect, and the Credit Card.
Goldman Sachs noted SoFi's momentum in Financial Services and the upward revision of its three-year compound annual growth rate (CAGR) forecast for 2023-2026, particularly in high-margin products like the Loan Platform Business. However, the firm also pointed out that several of SoFi's large businesses, such as Invest and Credit Card, are still not generating variable profits, and that new business deals within the Technology Platform are taking longer to implement than initially expected.
In light of these factors, and considering SoFi's current valuation at approximately 3.5 times price to tangible book value (P/TBV)—compared to regional banks trading at around 2 times P/TBV—Goldman Sachs reiterated its Neutral rating. The firm views the risk/reward balance for SoFi's stock as relatively even at this time.
In other recent news, SoFi Technologies has witnessed a flurry of activity. The company's Q4 earnings exceeded expectations, with significant growth in the Lending and Financial Services segments, leading to a remarkable EBITDA of $649.73M. However, SoFi's EBITDA guidance for 2025 fell short of analyst expectations, with the company projecting a 30% incremental adjusted EBITDA margin, lower than the greater than 50% margin anticipated by analysts.
Analysts' perspectives on SoFi's performance vary. BofA Securities and Keefe, Bruyette & Woods downgraded SoFi's stock due to valuation concerns, while Mizuho (NYSE:MFG) Securities and JPMorgan maintained a positive stance, with price targets set at $16. William Blair continues to hold an Outperform rating.
In terms of corporate news, SoFi announced the upcoming resignation of board member Michael Bingle, effective January 2025. CEO Anthony Noto entered into a prepaid variable forward contract on company stock, resulting in an upfront cash payment of $22.4 million. Additionally, Silver Lake Technology Associates IV, L.P. and related entities sold approximately 31.2 million shares of SoFi, reducing their ownership stake. These are all recent developments that investors should consider.
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