SOFI fell 12% today after a leaked earnings report which showed slightly better-than-expected top and bottom lines, but slightly worse-than-expected guidance. It's now down 79% from its ATH and is trading at a 1.35 price/book ratio – meaning that for every share you own, you almost own the equivalent value in assets as opposed to only betting on projected future cash flows. That's not unusual for a big bank's stock, as loan assets only generate a few cents on the dollar. For reference, JPM is currently trading at 1.41 P/B, and TD bank is trading at 1.73. There's a huge disconnect here, as SOFI is a young, high-growth company which could justify much higher multiples.
Many of the concerns related to student loans are, IMO, just “seeing ghosts” – Biden's plan for student loan forgiveness would not take away any existing loans from SOFI, as they have been refinanced as private loans, and the gov can only forgive federal loans. While this could decrease TAM for SOFI, it also allows more breathing room for people with >10k in student debt, reducing their risk of default and making them more attractive customers for SOFI. Furthermore, while the student loan moratorium has stunted SOFI's growth in taking on new loans, this will not last forever, and we can expect SOFI's already high revenue growth rate to explode.
I'm quite bullish on SOFI during this crash, so I'm wondering about your opinions on the bear case, or just your thoughts in general. It's been quite quiet regarding this stock lately.
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