Recently, SoFi Technologies Inc. (SOFI) had provided upbeat guidance for fiscal 2022 in its previous earnings report. However, today brings grave news as the company has revised and lowered the guidance reflecting the latest extension of student loans. Additionally, SOFI also announced the resignation of three members of its board: Clay Wilkes (Founder Galileo), Combes, and Carlos Medeiros (SoftBank).
Consequently, on April 6, 2022, SOFI stock plunged further down by 6.40% at an active volume of 6.48 million shares in the after hours. Thus, the stock was trading at a value of $8.19 per share in the late trading session.
SOFI’s Forecast Cut Down
To reflect the latest extension of the federal student loan payment moratorium, the financial services company has cut down its 2022 forecast.
Therefore, the company now expects adjusted net revenue of $1.47 billion while it forecasted $1.57 billion previously.
Moreover, SOFI brought down its 2022 adjusted EBITDA guidance to $100 million against the prior $180 million.
On the other hand, the company reaffirmed the previous Q1 2022 guidance of $280-$285 million for revenue and $0-5 million for EBITDA.
What Happened to Student Loans?
Previously, the Biden government keeping in mind the impact of Covid-19 had initiated a pause on federal student loan repayments from January through September 2021. The loan repayments were then scheduled for resuming in May 2022.
In the latest official report from the White House, the president’s administration has decided to extend the pause further through August 31, 2022. According to the report, if resumed as scheduled, millions of student loans borrowers would face immense economic pressure and hardship. This in turn would threaten the country’s still recovering financial stability. Hence, the government hopes to provide some relief and a continued lifeline to people as the U.S. recovers from the pandemic in the form of this extension.
How Does SOFI’s Future Look Despite the Cut Down?
Even though the latest forecast cut down has put the company and its stock in a bleak position, all is still not lost. While having reduced the forecasted figures, the company is still looking ahead to a nice growth of 45% YOY in revenue and tripling of the EBITDA.
Other than this, the company has a promising business structure with many developments taking place continuously. Its continuous engagement to win customers on top of winning with other fintech businesses (Galileo’s acquisition) is something that can’t be overlooked.
Conclusion
With the extension on student-loans repayments, SOFI has cut down its forecast for 2022. While the news affected the stock negatively, the company is still looking forward to much growth in the future.
