{"id":9475,"date":"2023-05-16T12:04:13","date_gmt":"2023-05-16T16:04:13","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/why-this-sofi-bull-says-skeptics-are-misunderstanding-the-stock\/"},"modified":"2023-05-16T12:04:14","modified_gmt":"2023-05-16T16:04:14","slug":"why-this-sofi-bull-says-skeptics-are-misunderstanding-the-stock","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=9475","title":{"rendered":"Why this SoFi bull says skeptics are misunderstanding the stock"},"content":{"rendered":"
\n

SoFi Technologies Inc. shares have slid 23% since the company posted earnings at the start of the month, and one bull thinks they\u2019ve taken an unfair beating.<\/p>\n

Mizuho\u2019s Dan Dolev defended SoFi
\n SOFI,
\n -1.99%<\/bg-quote>
\n in a late Monday note to clients, taking the view that bears on the name misunderstand the company\u2019s decision not to sell personal loans in the first quarter. Skeptics worry that the company was unable to sell these loans, but Dolev said he and his team \u201csee this differently.\u201d<\/p>\n

\n

\u201cWe believe the correct reasoning is that SOFI is able to earn ~6.4% annualized yield on holding its personal loans, which is more attractive than selling them at ~5%,\u201d he wrote.<\/p>\n

Don\u2019t miss: SoFi CEO Anthony Noto loads up further on stock<\/strong><\/p>\n

Another bearish point is that SoFi\u2019s move to hold more loans in the current climate could prompt regulators to ask the company for a more conservative approach to its accounting, potentially by contemplating a switch to CECL (current expected credit losses) accounting. Such a dynamic, posited by a Wedbush analyst in a Monday downgrade of SoFi\u2019s stock, \u201cwould in turn result in revenue headwinds,\u201d Dolev wrote, but he doubts the scenario will happen. <\/p>\n

\u201cWe argue that this is not even a possibility since regulators require that once you elect fair market value accounting you maintain it through either the sale or life of the loan, even if you hold it to maturity,\u201d Dolev wrote. <\/p>\n

See also: SoFi\u2019s stock is poised to benefit from \u2018powerful demographic shift,\u2019 a new bull says<\/strong><\/p>\n

He\u2019s also unconcerned about a risk factor from SoFi\u2019s latest 10-Q that could be spooking some on Wall Street. SoFi disclosed that if its \u201ccurrent net losses continue for the foreseeable future and we are not able to achieve GAAP net income profitability in 2023 as currently expected,\u201d it may have to raise additional debt or equity capital, \u201cwhich may not be at favorable terms when compared to previous financing transactions.\u201d<\/p>\n

Dolev said that SoFi has had some version of that risk factor in its filings dating back to its public debut, though the company tweaked the language this time around to mention GAAP profits. <\/p>\n

\u201cWe believe SOFI included this portion to emphasize its focus on achieving GAAP profitability by the fourth quarter,\u201d he wrote. <\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

SoFi Technologies Inc. shares have slid 23% since the company posted earnings at the start of the month, and one bull thinks they\u2019ve taken an unfair beating. Mizuho\u2019s Dan Dolev defended SoFi SOFI, -1.99% in a late Monday note to clients, taking the view that bears on the name misunderstand the company\u2019s decision not to […]<\/p>\n","protected":false},"author":1,"featured_media":9476,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-9475","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nWhy this SoFi bull says skeptics are misunderstanding the stock | iFintechWorld<\/title>\n<meta name=\"description\" content=\"SoFi Technologies Inc. shares have slid 23% since the company posted earnings at the start of the month, and one bull thinks they\u2019ve taken an unfair\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link 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