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SAN FRANCISCO & LONDON - SoFi Technologies, Inc. (NASDAQ: NASDAQ:SOFI), a digital financial services provider, in partnership with PrimaryBid Technologies Inc., a capital markets fintech firm, announced the introduction of DSP2.0, an advanced Directed Share Platform (DSP). The platform is designed to streamline the process of equity program management for companies in the U.S. aiming to raise capital through public offerings.
DSPs traditionally enable companies to allocate a portion of their share offerings to specific individuals or groups such as employees or customers. SoFi’s DSP2.0 promises to modernize this process by offering a fully digital experience, reducing the need for manual back-office processing, and allowing companies to reach a broader range of non-institutional investors.
Anthony Noto, CEO of SoFi, emphasized the new platform's ability to offer IPO shares to a wider audience, including those who have contributed to a company’s growth. The platform is said to allow for account openings via smartphone in seconds, with no costs or deposit requirements, aiming to democratize access to IPOs traditionally reserved for high net worth individuals.
Anand Sambasivan, CEO of PrimaryBid, highlighted the platform’s capacity to enfranchise investors who are significant to a company's long-term success, addressing the technical limitations of traditional DSPs. The platform is said to provide strategic flexibility for companies during capital raising events.
John Tuttle, former Vice Chairman for NYSE Group, noted the importance of innovation in engaging stakeholders during public offerings and suggested that such advancements could strengthen U.S. public markets and support emerging American companies.
SoFi’s full suite of financial products and services currently serves more than 8.8 million members. PrimaryBid, partnering with institutions like SoFi, London Stock Exchange Group (LON:LSEG), and Euronext, has facilitated over 350 transactions across various markets.
This announcement comes at a time when the IPO market is showing signs of a potential rebound in 2025. The information is based on a press release statement from SoFi Technologies.
In other recent news, SoFi Technologies reported a record-breaking Q2 2024 earnings with an adjusted net revenue of $597 million, reflecting a 22% year-over-year increase. This marks the company's third consecutive quarter of GAAP profitability, with a net income of $17 million. The Financial Services segment's revenue saw a significant 80% YoY increase, while the Tech Platforms segment experienced a 9% YoY rise in revenue.
Furthermore, SoFi added 643,000 new members, bringing the total to 8.8 million, and increased products by 946,000 to 12.8 million. The lending segment also demonstrated a strong performance, with personal loan originations reaching $4.2 billion.
Looking ahead, SoFi provided positive guidance for Q3 and full-year 2024, anticipating adjusted net revenue to reach up to $2.465 billion and GAAP net income up to $185 million. For Q3, the company projects an adjusted net revenue of $625-645 million and a GAAP net income of $40-45 million.
However, despite these robust figures, SoFi remains conservative with personal loan expansions due to potential economic downturns and unemployment concerns. It's also noteworthy that the Credit Card and Invest businesses are currently operating at a $100 million annualized loss, though profitability is expected in the future.
These are some of the recent developments that continue to shape the trajectory of SoFi Technologies.
InvestingPro Insights
As SoFi Technologies introduces its advanced Directed Share Platform, DSP2.0, it's worth examining the company's financial health and market performance. According to InvestingPro data, SoFi's market capitalization stands at $8.13 billion, reflecting its significant presence in the digital financial services sector.
SoFi's revenue growth is noteworthy, with a 30.3% increase over the last twelve months as of Q2 2024, reaching $2.34 billion. This robust growth aligns with the company's expansion of services, including the new DSP2.0 platform. The company's gross profit margin of 82.42% for the same period indicates strong operational efficiency.
InvestingPro Tips highlight that analysts expect SoFi to become profitable this year, which could be a positive sign for investors considering the company's growth initiatives. Additionally, SoFi has seen a strong return over the last three months, with InvestingPro data showing a 18.29% price total return for this period.
However, it's important to note that SoFi's stock price movements are quite volatile, which potential investors should consider. The company is also quickly burning through cash, which may be related to its ongoing investments in new technologies and platforms like DSP2.0.
For those interested in a deeper analysis, InvestingPro offers 5 additional tips that could provide further insights into SoFi's financial outlook and market position.
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