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SoFi’s Market Movement: Analyzing the Dip

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs
Updated 2/6/2025, 2:32 pm ET 2/6/2025, 2:32 pm ET | 6 min 6 min read
SoFi’s Market Movement: Analyzing the Dip Thumbnail

SoFi Technologies Inc.’s stocks have been hit by concerns over regulatory scrutiny and potential disruptions in the fintech sector. On Thursday, SoFi Technologies Inc.’s stocks have been trading down by -4.78 percent.

Latest Developments Impacting SOFI

  • BofA analyst Mihir Bhatia boosted SoFi’s target price to $13, citing mixed Q4 results and outlook for 2025, though customer growth is noted.
  • Keefe Bruyette views SoFi’s $525M personal loan securitization favorably for indicating strong capital market conditions, despite holding an Underperform rating.
  • SoFi expects its 2025 full-year earnings to be below estimates, forecasting an EPS between $0.25 to $0.27.
  • Despite reporting a Q4 earnings beat, SoFi guided next year’s earnings below expectations, resulting in a significant stock decline.
  • Shares dropped over 9% after issuing guidance below analysts’ expectations for Q1 and fiscal 2025.

Candlestick Chart

Live Update At 14:32:05 EST: On Thursday, February 06, 2025 SoFi Technologies Inc. stock [NASDAQ: SOFI] is trending down by -4.78%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

SoFi’s Earnings and Financial Metrics Overview

When it comes to successful trading strategies, there are several important factors to consider. One of the most crucial aspects is timing. As millionaire penny stock trader and teacher Tim Sykes says, “Be patient, don’t force trades, and let the perfect setups come to you.” Understanding market trends and being able to adapt quickly to changing conditions can significantly impact your success. Remember, trading isn’t just about reacting; it’s about being proactive and recognizing opportunities when they arise. Therefore, developing a clear plan and sticking to it can be just as important as making quick decisions in the heat of the moment.

Understanding the nuances of SoFi’s latest earnings is like piecing together a puzzle. While it triumphed with positive Q4 earnings, guiding below expectations for 2025 seemed a slippery road. SoFi’s projected Earnings Per Share (EPS) of $0.25 to $0.27 is short of the consensus estimate of $0.28. A small gap, but in the stock world, that spread matters. This naturally impacts investor confidence, hence the stock dip.

Revenue, clocking in at over $2.12B, shows robust growth, but higher costs have cast shadows on profit margins. The pretax profit margin of -16.1% suggests their profitability isn’t quite where it needs to be yet. Speaking of profitability, their EBIT margin stands at -8.2%, showing room for potential improvements.

Financially, SoFi’s got a tale of two cities. Their debt is relatively manageable with a debt-to-equity ratio of 0.54, yet their cash flow paints a picture of struggle with a negative free cash flow of over $1B. It’s like having a hand in two pockets but finding no loose change.

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Questions loom large: Can they maintain growth? The asset turnover ratio remains low at 0.1, implying revenue generation needs more mileage from their assets.

Reasons Behind the Stock Price Movement

SoFi’s stock had a bumpy ride, recently losing over 9% of its value, largely due to its guidance not meeting the hopeful eyes of market analysts. The shift in expectations frequently influences stock volatility, creating ripples—like tossing a stone into a pond.

BofA and Keefe’s perspectives hold significant weight. On one hand, BofA’s adjustment to a $13 price target may instill optimism, even amid an ‘Underperform’ label. On the other, Keefe Bruyette’s consistent view isn’t exactly ringing endorsement bells, but instead pointing out structural gains overshadowed by rate hikes.

The intrigue deepens with SoFi’s securitization move, hinting at steady market demand but juxtaposed against a loan portfolio towering at $25.2B, painting a picture of ambitious growth.

Analysts reckon their Q4 wins won’t be enough to fend off market skepticism if future roadmaps fall short. Much hangs on SoFi’s ability to juggle growth aspirations while curbing costs—a challenge requiring strategic finesse.

Conclusion

In an ever-competitive fintech landscape, SoFi finds itself threading the needle between ambitious growth and profitability concerns. Their current trajectory is marked by promising customer acquisitions but shadowed by near-term operational costs. As millionaire penny stock trader and teacher Tim Sykes, says, “It’s not about how much money you make; it’s about how much money you keep.” This serves as a reminder that SoFi must focus not only on revenue generation but also on careful financial stewardship. Whether they’re crafting a gratifying story or just writing chapters of caution is a question for traders to ponder. The stock’s sharp decline post-earnings guidance reveal highlights market demands for reassurance and consistency in performance—nudging SoFi to not only dream big but act prudently. In this intricate dance of expectations and deliverables, can SoFi leave a lasting mark, or will they be led to recalibrate their steps? Time will undoubtedly tell.

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Tim Sykes

Head Writer at TimothySykes.com, Lead Mentor at the Trading Challenge
In his 20-plus years of trading, Tim has made $7.9 million. In his 15-plus years of teaching, Tim’s Trading Challenge has produced over 30 millionaire students. His philosophy emphasizes small gains and cutting losses quickly.
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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”