SoFi Stock Closes At New Peak Ahead Of Q3: Here's How Retail's Positioned

• The stock is currently on a two-week winning streak amid expectations of a strong Q3 report and a Fed rate cut.
• Wall Street expects the company to post earnings of $0.09 per share on revenue of $895 million.
• Despite SoFi’s high valuation, most retail traders were looking at the stock as a long-term buy.

SoFi Technologies (SOFI) stock gained 3.2% in extended trading ahead of its earnings on Tuesday.

According to Fiscal.ai data, Wall Street expects the company to post earnings of $0.09 per share on revenue of $895 million. The consumer finance firm has topped estimates in three of the previous four quarters.

The stock gained 3.4% in the regular trading session on Monday, finishing the day at $30, the highest closing price for the shares, although off the all-time intraday high of $30.30, set on Sept. 22. SoFi shares are currently on a two-week winning run amid expectations of a strong Q3 report and a Fed rate cut.

What Is Retail Thinking?

Retail sentiment on Stocktwits about SoFi was in the ‘extremely bullish’ territory at the time of writing, compared with ‘bullish’ a week ago.

One user, who identified himself as a real estate broker, said he was impressed with SoFi mortgage and called it a good sign for the company.

“I don’t believe anyone holding shares for the long term is worried about a sell-off tomorrow. Only people worried about that are traders, not long-term buy-and-hold investors,” another investor said.

How Does SoFi Compare To Peers?

SoFi stock has doubled this year, compared with the 11.5% gains for peer LendingClub’s shares and the 25.7% rise in Enova’s shares. SoFi’s forward price-to-earnings ratio, a key valuation gauge, stands at 71.5, a significantly higher multiple than peers.

While "several positive potential catalysts" could bring support for SoFi shares in the near term, SoFi's risk/reward "seems skewed negatively over the long term given the premium valuation," Keefe Bruyette analysts said earlier this month, according to TheFly.

However, SoFi’s peers have posted blockbuster third-quarter earnings reports, buoying investor confidence. Lendingclub said last week its loan origination volume jumped 37% compared to a year earlier, while net income tripled. Another rival, Enova, also topped expectations and posted an 85% jump in earnings.

Consumer finance firms are also expected to benefit from rate cuts this year, which tend to boost loan originations. SoFi’s home loan originations already jumped 92% during the second quarter.

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