Fintech leader SoFi (SOFI +0.25%) plunged on Monday morning, despite reporting better-than-expected earnings for the fourth quarter. As of 10 a.m. ET, SoFi's stock was down by about 10% for the day in volatile trading.
The headline numbers look incredibly strong, with the company handily beating expectations on both the top and bottom lines. And if we look a little deeper, there's not much to be upset about.
NASDAQ: SOFI
Key Data Points
SoFi's strong fourth quarter
Looking beyond the headlines, there's a lot to like about SoFi's fourth-quarter results. Just to list a few key points:
- SoFi added 785,000 members in Q4 alone, an all-time high.
- Its loan platform business, which is designed to generate capital-light fee income, originated $1.1 billion in personal loans for third parties in the quarter -- more than it originated in the first three quarters of the year combined.
- It signed several new partnership deals for its Galileo tech platform, including one with the U.S. Treasury that made it the processing partner for Direct Express.
- SoFi's credit quality improved significantly, as annual personal loan charge-offs decreased by 15 basis points.
- SoFi's net interest margin increased from 5.57% in Q3 to 5.91% in Q4, thanks to lower costs on interest-bearing deposits.
Why is the stock falling?
The main reason why SoFi is under pressure on Monday is likely management's guidance. For 2025, SoFi expects its revenue to be in the range of $3.2 billion to $3.275 billion, and it expects earnings per share to be between $0.25 and $0.27.
The revenue guidance range was significantly higher than the analyst consensus estimate, but the earnings per share range was a little low. In simple terms, more revenue than expected, combined with lower profits than expected, could be the result of a much lower margin than investors had been hoping to see.
