Why SoFi Stock Lost 24% in August
Shares of SoFi Technologies (NASDAQ: SOFI) stock fell 24% in August, according to data from S&P Global Market Intelligence. Bank stocks as a group fell because of more macroeconomic concerns about continued inflation, and because the Federal Reserve resumed interest-rate increases.
SoFi has been demonstrating strong momentum. Sales continue to increase at a high rate, 37% over last year in the 2023 second quarter, to $498 million. It recruited close to 600,000 new members, for a total of 6.2 million, and it added more than 800,000 new products across its categories.
It's also getting closer to profitability. Adjusted earnings before interest, taxes, depreciation, and amortization increased 237% to $78 million, and it's expecting to turn a profit by the end of the year.
SoFi started out as a student loan cooperative, and as it's gotten bigger, it's expanded into multiple digital financial products. However, its core customer is still the student, or post-student, and this younger cohort is drawn to SoFi's easy-to-use, one-stop app that offers bank accounts, credit cards, and more, all in a digital format with low fees. Financial-services products are growing rapidly, with bank accounts up 47%, investing accounts up 18%, and credit cards up 53%. Financial services revenue increased 223% in the quarter, with net interest income up 477%.