The Market Doesn't Like SoFi's Accidentally Leaked Earnings Results. Is It a Buy?

First-quarter earnings results for the one-stop financial services provider SoFi Technologies (SOFI -9.97%) were accidentally leaked early today, prompting the stock to fall more than 18% before trading was halted.

SoFi reported a net loss per share of $0.14 on total revenue of roughly $330.4 million. Earnings were in line with estimates, while revenue beat easily.

Image source: Getty Images.

In the quarter, the company added more than 400,000 members and grew its total membership to 3.87 million. It also added another 10 million accounts to its tech platform Galileo. Revenue in SoFi’s lending segment came in at $252 million and the division had a contribution profit of $132.7 million, both the highest each has generated.

Its lending division generated more than $2 billion of personal loan originations, while student loan originations of $984 million fell significantly from the previous quarter, largely because of the student loan moratorium extension.

SoFi’s financial services and technology segments also generated record revenue, although both of their contribution profits declined from the previous quarter. 

In financial services, the company added 212,000 new SoFi Invest accounts, which is its online brokerage, and 188,000 SoFi Money account users, which relates to its depository account. Now that it’s a bank, SoFi has brought the $1.2 billion in deposits it was likely storing at other banks onto its balance sheet.

The company also provided guidance for the second quarter and full year of 2022. It expects to generate adjusted net revenue of $322 million and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) between $5 million and $15 million.

For the full year, SoFi expects adjusted net revenue of roughly $1.51 billion, which is up slightly from the company’s prior full-year revenue guidance. Adjusted EBITDA guidance between $100 million and $105 million is essentially flat from the prior $100 million initial guidance.

Investors appear to have sold the stock initially because revenue guidance for the second quarter came in less than analysts had been projecting. Full-year adjusted EBITDA is also below analyst estimates of $119 million, according to Bloomberg.

In my opinion, this initial sell-off looks overdone based on this early leaked data. SoFi is still growing nicely and far exceeded revenue guidance, despite the slowdown in student loan activity, which was offset by a nice jump in personal loans. While the student loan moratorium has been extended several times, it likely won’t last forever.

As a bank, SoFi can now begin potentially making more money on its loans by holding them on the balance sheet longer and collecting recurring monthly interest payments.

Furthermore, I am excited to see how SoFi integrates Galileo with its new acquisition of Technisys and offers this tech stack to other banks and fintech companies. The company is still not profitable and may face some near-term pressure still trading around a $5 billion market cap. But I like the direction SoFi is headed in and see this as a solid entry point as a long-term buy.