What happened
Shares of SoFi Technologies (SOFI +2.05%) climbed 37% in July, according to data provided by S&P Global Market Intelligence, after the fintech and banking company announced strong second-quarter 2023 results and raised its full-year outlook.
To be sure, SoFi rallied both leading up to and following its impressive Q2 report on July 31. As for its headline numbers, SoFi's adjusted quarterly revenue rose 37% year over year to $488.8 million, trouncing estimates for $476 million. The banking services and fintech stock also halved its generally accepted accounting principles (GAAP) net loss to $0.06 per share in Q2, beating estimates calling for a wider loss of $0.07 per share.
NASDAQ: SOFI
Key Data Points
So what
SoFi bolstered its member count by 44% year over year to 6.2 million, including a company-record 584,000 new members this quarter, while products rose 43% to over 9.4 million. Deposits at the company's SoFi Bank subsidiary also soared 26% sequentially this quarter, to $12.7 billion.
SoFi CEO Anthony Noto pointed out the company is benefiting from a combination of strong cross-buying activity and improving operating leverage thanks to its "broad product suite and unique Financial Services Productivity Loop (FSPL) strategy."
If its Q2 beat wasn't enough, SoFi confirmed it remains on track to achieve GAAP profitability on a consolidated basis by the end of this year. SoFi also raised its outlook to call for 2023 adjusted net revenue of $1.974 billion to $2.034 billion (up from $1.955 billion to $2.02 billion previously and good for growth of over 30% at the midpoint), and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $333 million to $343 million (up from $268 million to $288 million).
Now what
Curiously, SoFi shares have given back about half of last month's gains so far in August -- pulling back last week along with the broader market after Fitch Ratings downgraded its rating on United States debt by one notch, from AAA to AA+. Of course, this shouldn't have any meaningful direct impact on SoFi's business -- particularly as it focuses on prime borrowers and consumer banking, and remains well positioned to continue growing and taking market share from incumbents regardless of the direction of interest rates going forward. But Fitch's move undoubtedly dampened investor sentiment for the overall market, and has caused many high-flying tech stocks like SoFi to fall in the near term.
Over the longer term, SoFi remains one of my highest-conviction stocks. And though shares have more than doubled already in 2023 as of this writing, I suspect they have plenty of room to run as SoFi continues to march toward sustained profitability and its goal of becoming a top-10 bank in the United States.
