Buy SoFi Stock, Analyst Says. Sellers Have Got It Wrong.

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SoFi stock has risen 1.7% so far this year.

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SoFi Technologies

stock has suffered a steep drop this month. But the arguments for the selloff are wrong, according to Mizuho.

Shares of SoFi (ticker:

SOFI

) have dived 23% since the company reported first-quarter earnings on May 1. The day after the report, Wedbush downgraded the stock to Neutral from Outperform, citing meager loan sales. Wedbush analyst David Chiaverini lowered his rating on SoFi stock again on Monday to the equivalent of Sell, writing that he is concerned the market for loans has weakened. But Mizuho analyst Dan Dolev says there are reasons to stick with the finance company.

While SoFi does issue student, home, and personal loans to consumers, a key part of its business is securitizing and selling those loans to investors.

SoFi sold $78 million in the home loans segment in the first quarter, but no sales were conducted within the personal loan and student loan refinancing segments, suggesting softening demand from investors. In the previous quarter, the company did about $200 million worth of whole loan sales across segments.

The notable slowdown in loan sales during the quarter has investors worried that SoFi would need to mark down the value of its loans, which could prevent it from achieving profitability this year and possibly lead to a capital raise.

The decision to sell or hold the loans, CEO Anthony Noto said after the earnings report, is based on the company’s need for liquidity and ability to maximize returns. And SoFi has a sound liquid position, according to Noto,…

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