Analyst reboots SoFi Technologies price target after capital raise | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

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SoFi Technologies (SOFI) was having a good day back on July 29. The fintech beat Wall Street’s second-quarter earnings forecasts and raised its full year revenue outlook.

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“We had an excellent second quarter as we continue to drive durable growth and strong returns through our relentless focus on product innovation and brand building,” CEO Anthony Noto told analysts during the company’s earnings call.

“Our one stop-shop strategy is stronger than ever, further accelerating our year over year growth in adjusted net revenue to 44%, the highest growth rate in over two years and driving a 5.6 times year over year increase in earnings,” he added.

A record 850,000 new members joined SoFi in the quarter, the company said, up 34% from the prior year to 11.7 million. SoFi added a record 1.26 million new products, up 34% from the prior year to 17.1 million products.

SoFi Technologies CEO Anthony Noto says the company had excellent second quarter.

Sean M&period; Haffey/Getty Images

SoFi CEO cities AI applications

“We’re implementing and testing AI applications across our business from enhancing back office processes like dispute resolution and filing suspicious activity reports to improving how we interact with our members to help them get their money right and we brought on teams of engineers to drive these efforts forward,” Noto said.

The company recently relaunched their crypto investing services, allowing users to buy, sell, and hold various cryptocurrencies like Bitcoin and Ethereum.

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“I am very excited that during the second quarter, we announced the first two of many planned crypto and blockchain innovations across our products and services,” Noto said.

“The ability to leverage blockchain technology to send money internationally is yet another enhancement of SoFi’s unprecedented money movement offering.”

Analysts reacted well to the company’s earnings report, with Truist raising the firm’s price target on SoFi to $23 from $20 and kept a hold rating on the shares.

The firm cited the company’s strong second quarter print, higher origination volumes, higher interchange revenues, and a better than previously expected incremental margin, according to The Fly.

Mizuho raised the firm’s price target on SoFi Technologies to $26 from $20 and kept an outperform rating on the shares.

The firm said the company’s Q2 report was strong across all important metrics. SoFi’s home lending origination grew over 90%, which is “simply the beginning” as it was done in a still weak housing mortgage market, Mizuho said.

After the earnings report, SoFI announced an underwritten public offering of $1.5 billion of its common stock.

Trader says raising capital a normal function

The offering included a 30-day option for the underwriter to purchase an additional 15% of the shares.

SoFi said that it intends to use the net proceeds for general corporate purposes, including working capital and other business opportunities.

The news of the share offering prompted investor concern about potential share dilution, causing the stock to dip after a post-earnings report rally.

“Investors are concerned that the new offering could dilute already existing shares, much in the same way that increasing the money supply can devalue a currency,” TheStreet Pro’s Ed Ponsi said.

SoFi’s stock is up 39% this year and shares have soared 228% from this time in 2024.

“It might take time for SoFi to absorb the impact of new shares hitting the market, but raising capital is a normal function of young, fast-growing companies,” Ponsi said.

“I’m not going to allow short-term turbulence to shake me out of this name. SoFi has too much potential to let it go now, just as digital financial services are becoming mainstream.”

Keefe Bruyette analyst Timothy Switzer raised the firm’s price target on SoFi Technologies to $14 from $13 and kept an underperform rating on the shares.

“As for the capital raise, we were not surprised despite management’s historical resistance to the idea given our previously stated position that capital was moving unsustainably low,” Switzer said.

“We view the raise positively as it was opportunistically timed with the higher share price, causing the deal to simultaneously ease capital restraints while still being accretive to EPS.”

Switzer projected that the reported total capital ratio, crucial metric for evaluating a bank’s financial health and stability, will improve to 19.4% in the third quarter following the equity issuance.