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.