Student record

SOFI stock will continue to suffer, and not just from student loans

Source: rafapress/

If you haven’t heard yet, Sofi Technologies (NASDAQ:SOFI) had to reduce its orientations. The decision by President Joe Biden’s administration to extend the moratorium on the repayment of federal student loans on April 6 prompted the financial firm to make its decision. Naturally, SOFI stock fell after the expansion was announced.

The company was quick to release its updated guidance on the same date. SoFi Technologies expects the expansion to result in approximately $80 million less net revenue in 2022. It also projects that it will see an impact of $100 million on its projected EBITDA.

The company has gone so far as to predict that this latest extension of the student loan moratorium will not be the last. He anticipates the political ramifications of resuming student loan repayments before the November midterms, meaning another extension is likely. The company expects to see no resumption of payments on federally held student loans in 2022.

This is indeed a negative for the company, whose shares have trended lower throughout 2022. That said, analysts aren’t so sure that SOFI shares remain anything but worth buying. The analysts of Mizuho Titles and Wedbush maintained their outlook for stocks, but lowered target prices slightly.

I question their optimistic assumptions. SOFI is a growth stock that is counting on the markets to forgive the fact that it continues to lose massive sums. Yes, SoFi Technologies reported record Q4 and 2021 earnings. But why should markets reward it, a growth stock, in an environment where the Federal Reserve will continue to punish such stocks?

SoFi Technologies’ net losses more than doubled in 2021, reaching $483.9 million. This number is expected to remain low as the company does not expect student loans to pick up this year and the Fed will raise interest rates through 2022.

None of this favors SOFI stocks. In other words, don’t put much into those $14 and $15 target prices from Mizuho and Wedbush. These are unlikely to materialize this year.

At the date of publication, Alex Sirois did not hold (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to Publication guidelines.

Alex Sirois is an Independent InvestorPlace Contributor whose personal equity investing style focuses on long-term stock picks, buy-and-hold, and wealth building. Having worked in multiple e-commerce industries to translation to education and using his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.