SoFi Technologies (SOFI) saw its stock retreat Tuesday, reversing some of Monday's gains, after Truist Securities revised its price target downward, casting a shadow over the company's record first-quarter results. Shares hovered around $15.75 in midday trading, down 51 cents from the previous close, after touching an intraday low of $15.63.
Truist's Cautious Outlook
Truist analyst Matthew Coad reduced his price target to $17 from $20 while maintaining a Hold rating. Coad flagged weaker-than-expected sales forecasts for SoFi's loan-platform segment and dialed back expectations for its Galileo and Technisys technology units. The move underscores ongoing investor skepticism about the durability of SoFi's growth beyond its core lending business.
Record Q1 Numbers, But Questions Remain
SoFi's first-quarter results were undeniably strong. Adjusted net revenue hit a record $1.1 billion, up 41% year-over-year, while adjusted EBITDA surged 62% to $340 million. Loan originations reached a new high of $12.2 billion, spanning personal, student, and home loans. Total membership climbed 35% to 14.7 million. CEO Anthony Noto described the quarter as a "remarkable start" to the year.
However, investors are focusing on the company's softer spots. Net revenue from SoFi's technology platform slumped 27% in Q1 to $75.1 million, following the departure of a major client. Truist warned about more conservative assumptions for future loan-platform sales, a segment where SoFi originates loans for other institutions. If outside buyers pull back, those fee streams could evaporate quickly.
PrimaryBid Acquisition and Strategic Moves
SoFi's recent acquisition of PrimaryBid's assets aims to bolster its technology offering, particularly in directed share platforms for retail IPO access. While the deal adds muscle to SoFi's non-lending capabilities, it did little to offset Tuesday's selling pressure. The stock failed to hold above $16.30, and sellers remained active following the earnings release.
Broader Fintech Weakness
SoFi was not alone in its decline. Other fintech names, including Upstart (UPST), LendingClub (LC), and Robinhood (HOOD), also fell, reflecting broader sector weakness. The selloff highlights a risk-off sentiment toward fintech stocks amid an uncertain interest rate environment.
Rate Cut Expectations Dim
April's CPI data showed headline inflation at 3.8% and core inflation at 2.8%, reinforcing expectations that the Federal Reserve will hold rates steady. Polymarket traders price a 98% chance of no rate move in June, while Kalshi places odds of zero cuts in 2026 at 54.3%. Higher rates boost SoFi's loan yields but dampen refinancing activity and weigh on growth stocks sensitive to credit conditions.
Valuation and Outlook
SoFi trades at a price-to-earnings ratio of about 35, a level that offers little margin for error if growth slows. Shares are well below their 52-week high of $32.73. Management maintained its full-year guidance: adjusted net revenue of approximately $4.655 billion, adjusted EBITDA of about $1.6 billion, and adjusted EPS of roughly $0.60.
Key metrics to watch in Q2 include loan-platform sales, technology-platform revenue, credit losses, and tangible results from the PrimaryBid acquisition. Bulls point to continued member growth, but bears argue the stock must demonstrate sharp execution outside of lending. Tuesday's price action suggests the market is not yet ready to give SoFi the benefit of the doubt.
