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SoFi Technologies Inc Ordinary Shares SOFI

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Morningstar’s Analysis

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SoFi Reports Strong Results as Personal Loans Drive Revenue and EBITDA to Beat Guidance

Michael Miller Equity Analyst

Analyst Note

| Michael Miller |

No-moat-rated SoFi reported strong third-quarter results with strength in the company’s lending segment leading the way. SoFi easily beat its net revenue guidance of $245 million to $255 million with third-quarter net revenue of $277 million. This was a 16.9% sequential increase in revenue from last quarter and 27.6% above last year’s results. The largest driver behind the beat was the company’s personal lending business which grew off an already strong second quarter with total loan origination of $1.64 billion during the third quarter, 166% above last year’s results. The company’s student lending segment was more muted, down 6% from last year, as it continues to be affected by the CARES Act’s student loan forbearance program. However, we see this as a temporary issue and expect the segment to recover quickly when the program ends next year, while the company’s strength in personal lending represents secular growth. As we incorporate these results, we are increase our fair value estimate for SoFi to $22.00 from $20.50 as we increase our projections for SoFi’s loan growth.

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Company Profile

Business Description

SoFi is a financial services company that was founded in 2011 and is currently based in San Francisco. Initially known for its student loan refinancing business, the company has expanded its product offerings to include personal loans, credit cards, mortgages, investment accounts, banking services, and financial planning. The company intends to be a one-stop shop for its client's finances and operates solely through its mobile app and website. Through its acquisition of Galileo in 2020 the company also offers payment and account services for debit cards and digital banking.

234 1st Street
San Francisco, CA, 94105
T +1 855 456-7634
Sector Financial Services
Industry Credit Services
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical