Shares of SoFi Technologies (SOFI +3.17%) have slipped 11.2% this week, according to data from S&P Global Market Intelligence. The online bank posted earnings that beat Wall Street estimates, but its guidance was reportedly below investor expectations.
The stock is now in a 49% drawdown from all-time highs. Here's why SoFi stock slipped again this week, and whether investors should buy the dip on this fast-growing banking disruptor.
NASDAQ: SOFI
Key Data Points
Steady growth, guidance worries
Topline growth in the first quarter was rock-solid for SoFi, keeping up its multi-year trend of taking market share in the personal banking industry. The bank added $2.7 billion in the quarter, bringing total assets to $40 billion, and total customers grew 35% year-over-year to 14.7 million. Adjusted net revenue was up 38%. Across the board, some more fantastic growth for SoFi.
Where investors lost their optimism was that SoFi did not raise its current-quarter guidance, keeping revenue growth at 30% vs. a Wall Street estimate of 31%. Decelerating revenue is never something investors like to see, which can lead to short-term volatility in share prices.
What's more, SoFi continues to grow its personal loan portfolio, originating $8.3 billion in new loans in the quarter. If its underwriting models are correct, SoFi will see increasing net interest income from these new loans. However, fast-growing lenders can also scare Wall Street, especially an unproven one like SoFi, which has not dealt with an extended consumer recession.
Image source: Getty Images.
Time to buy the dip?
Despite this sharp drawdown, SoFi still doesn't trade at a cheap earnings multiple, with a price-to-earnings ratio (P/E) of 37 as of this writing. If you believe that SoFi can keep growing its members and revenue and generate significant earnings from its lending business, the stock could be cheap here. But don't think this is an easy value stock you can buy the dip on and expect a smooth ride into the sunset.
