SoFi stock drops 12% despite strong Q1 earnings as outlook disappoints

SoFi Technologies reported strong first-quarter results, with profit and revenue surpassing expectations, but its shares fell sharply after the company issued a slightly weaker-than-expected outlook for the current quarter.

The financial services firm said it expects adjusted revenue growth of around 30% in the second quarter, just below analyst estimates of 31%.

The cautious guidance appeared to dampen investor sentiment, sending shares down by over 12% in early trading on Wednesday.

While the company reaffirmed its full-year outlook, it stopped short of raising its forecast despite the upbeat quarterly performance, which some investors had anticipated.

Strong growth in lending and membership

SoFi posted a net profit of $167.1 million, or 12 cents per share, for the quarter ended March 31, up from $71.5 million, or 6 cents per share, a year earlier.

Adjusted earnings came in at 12 cents per share, in line with analyst expectations.

Revenue rose 43% year-on-year to $1.10 billion, beating the $1.05 billion estimate from analysts surveyed by FactSet.

The company’s growth was largely driven by its lending business, which continued to expand at a rapid pace.

Total loan originations reached a record $12.2 billion, marking a significant increase from the previous quarter.

Student-loan originations more than doubled to $2.6 billion, while home-loan originations also surged to $1.2 billion.

Personal loans remained a key contributor, with originations hitting $8.3 billion, another record for the company.

SoFi also reported improved credit performance, with annualized net charge-offs in its personal loan segment declining by 28 basis points compared with the previous year.

Membership growth remained robust, with the company adding 1.1 million new users during the quarter.

Total membership rose 35% year-on-year, reflecting continued traction across its platform.

Fee business and outlook raise concerns

Despite strong lending momentum, some analysts flagged concerns around SoFi’s fee-based businesses.

William Blair analyst Andrew Jeffrey noted that the company “uncharacteristically did not flow through” its recent upside into its forward guidance.

He pointed to weakness in SoFi’s loan platform business, where volume declined by roughly $700 billion sequentially to $3 billion, falling short of expectations.

“Our sense is that private credit woes are hitting home,” Jeffrey said.

Fee-based revenue, which includes referral, interchange and brokerage income, has been an important growth pillar for SoFi, but signs of softness in this segment have raised questions about sustainability.

Expansion into digital assets

Beyond lending, SoFi continues to diversify its business model.

During the quarter, the company launched a stablecoin, SoFiUSD, and expanded its capabilities in digital asset settlement.

“Our strategic entry into new areas like digital assets alongside the strong growth in our existing businesses are strengthening and diversifying our platform,” Chief Executive Anthony Noto said in a statement.

Noto added that the company plans to continue investing in product innovation and customer experience as it seeks to sustain long-term growth.