SoFi Technologies reported strong first-quarter results with better-than-expected profits and sales, but its stock price plunged after the company issued a slightly weaker-than-expected outlook for the current quarter.
The financial services company said it expects adjusted sales growth of about 30% in the second quarter, slightly below the 31% expected by analysts.
The stock fell more than 12% in early trading Wednesday, as cautious guidance appeared to dampen investor sentiment.
The company reaffirmed its full-year outlook, but failed to raise its forecast despite the strong quarterly results that some investors had expected.
Significant increase in financing and membership numbers
SoFi’s net income for the quarter ended March 31 was $167.1 million, or 12 cents per share, up from $71.5 million, or 6 cents per share, in the year-ago period.
Adjusted earnings were 12 cents per share, in line with analyst expectations.
Revenue rose 43% year over year to $1.1 billion, beating the $1.05 billion expected by analysts surveyed by FactSet.
The company’s growth was primarily driven by its lending business, which continued to expand at a rapid pace.
Total lending reached a record high of $12.2 billion, a significant increase from the previous quarter.
Student loan originations more than doubled to $2.6 billion, and mortgage loan originations soared to $1.2 billion.
Personal loans remained the major contributor, with loan volumes reaching $8.3 billion, a new record for the company.
SoFi also reported improved credit performance with net charge-offs down 28 basis points year-over-year in its personal loans segment.
Membership growth remains strong, with the company adding 1.1 million new users during the quarter.
Total membership increased 35% year over year, reflecting continued traction across the platform.
Fee business and prospects raise concerns
Despite strong lending momentum, some analysts cited concerns about SoFi’s fee-based business.
William Blair analyst Andrew Jeffrey said the company’s recent turnaround was “unusually not reflected in its forward guidance.”
He pointed to weakness in SoFi’s lending platform business, with trading volume down about $700 billion from the previous quarter to $3 billion, lower than expected.
“Our sense is that we are in the midst of a private credit crisis,” Jeffrey said.
Fee-based revenue, which includes referral, exchange and brokerage revenue, has been a key growth pillar for SoFi, but signs of weakness in this sector raise questions about its sustainability.
Expanding to digital assets
Beyond lending, SoFi continues to diversify its business model.
During the quarter, the company launched its stablecoin SoFiUSD to expand its capabilities for digital asset payments.
“Alongside strong growth in our existing businesses, our strategic entry into new areas such as digital assets is strengthening and diversifying our platform,” CEO Anthony Noto said in a statement.
Noto added that the company plans to continue investing in product innovation and customer experience to sustain long-term growth.
