April 29 - SoFi (NASDAQ:SOFI) heads into its first-quarter report with fresh optimism after JMP Securities' Devin Ryan initiated coverage with a Buy rating, calling the fintech an inflection point story with exceptional growth potential.
Analysts expect Q1 revenue around $739 million, down from $1.01 billion last quarter, and EPS of $0.03, versus break-even a year ago. The slide in loan originations, which Morgan Stanley pegs at just 5% growth this quarter compared with double-digit gains last year, underpins the revenue drop.
Higher interest rates are squeezing consumer demand, and student-loan refinancing volumes face headwinds from government relief programs. Yet SoFi's shift into banking is bolstering deposit growth and trimming its cost of capital. Deposit balances rose an estimated 25% year-over-year, helping lift net interest margins.
Beyond lending, SoFi's financial-services arm, encompassing checking, investing and credit cards, saw new customer sign-ups jump about 40% year-over-year. With its Cosmos private-investing platform set to ramp, management believes diversified fee streams can offset slower loan growth. Investors will watch guidance on loan originations, margin outlook and deposit trends for clues on whether SoFi can sustain its momentum.
SOFI shares are up 2.5% in early trade on Tuesday.
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