California-based SoFi Technologies (SOFI) is a digital financial products company. It offers credit, savings, and investing products to its community of more than two million members. In an expansion move, SoFi recently entered the financial planning industry through an exclusive partnership with the Financial Planning Association, which has nearly 19,000 professional members.
The company recently raised $1.2 billion through convertible notes maturing in 2026. It plans to use the funds to cover certain transaction expenses and for general corporate purposes.
With this in mind, let us take a look at the financials of the company and understand its newly added risk factors. (See Insiders’ Hot Stocks on TipRanks)
Q3 Financial Results
Revenues of $272 million during the quarter surpassed the consensus estimate of $251.6 million. The company had reported revenues of $201 million in the same quarter last year. It posted a loss per share of $0.05, narrower than the loss of $0.70 per share in the same quarter last year. The figure also beat the consensus estimate of a loss of $0.14 per share. (See SoFi Technologies stock charts on TipRanks).
According to the new TipRanks’ Risk Factors tool, SOFI’s main risk categories are Finance & Corporate and Legal & Regulatory, which account for 44% and 28%, respectively, of the total 101 risks identified for the stock. The company has recently updated its profile with 99 new risks.
SOFI tells investors that its organizational documents contain provisions that may discourage or prevent a third-party from acquiring it. As a result, shareholders may miss out on a potentially favorable takeover transaction.
SoFi anticipates Q4 adjusted net revenue in the range of $272 million to $282 million. It expects adjusted EBITDA of $2 million to $5 million. For full-year 2021, it expects revenue in the band of $1 billion to $1.01 billion and adjusted EBITDA of as much as $31 million. However, the company cautions that its forecasts may fall materially short of expectations, which could cause its stock price to decline. The company mentions that it operates in a rapidly changing industry and that its operating results depend on its ability to grow membership and enterprise partnerships.
The company highlights that it may need to raise additional capital in the future to support its business objectives. SoFi says that it could seek equity or debt financing, but acknowledges that the terms for acquiring the same may not be favorable. Further, the company warns that cash shortage could adversely affect its lending operation and hamper its ability to pursue its business objectives.
The Finance and Corporate risk factor’s sector average is at 61%, compared to SOFI’s 44%. Shares of the company have gained about 70% year-to-date.
On November 17, Credit Suisse analyst Timothy Chiodo maintained a Hold rating on the stock and raised the price target to $19 from $16.50. Chiodo’s new price target suggests 10.04% downside potential.
Consensus among analysts is a Strong Buy based on 5 Buys and 1 Hold. The average SoFi Technologies price target of $26.33 implies 24.67% upside potential to current levels.
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