SoFi is an emerging fintech that probably listed shares publicly too soon. Last week, the company
blamed the U.S. student loan moratorium on its lower 2022 guidance. This is not the first time Sofi used
the loan payment delay as an excuse for weak results.
Sofi said adjusted net revenue of $1.47 billion will be below its prior guidance of $1.57 billion. Analysts
expected $1.55 billion in revenue. Adjusted EBITDA is $100 million. This is nowhere near the previous
guidance of $180 million.
What Went Wrong
Sofi acquired Galileo technology to build a moat against its competitors. More recently, it acquired
Technisys for around $1.1 billion. This will add $500 million to $800 million in cumulative revenue
through year-end 2025. Furthermore, the unit will realize savings of $85 million in total savings from
2023 to 2025. It will save $60 million to $70 million annually after that.
Sofi’s Technisys acquisition will weigh on results and hurt shareholders from here. The company
overpaid for the technology. It has two major platforms to develop. Sofi risks failing to meet its
forecasts. It may need more engineering staff to integrate Technisys into Sofi’s offerings.
Instead of taking a risk on Sofi, fintech investors should consider traditional banks and credit services
firms instead. They are all trading at discounts.
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