SoFi Stock Slides After BofA Downgrade Over Valuation Concerns: Retail Goes Contrarian

Shares of fintech firm SoFi Technologies Inc (SOFI) fell over 3% on Monday after Bank of America downgraded the stock citing valuation concerns.

BofA reportedly downgraded SoFi Technologies to ‘Underperform’ from ‘Neutral’ while keeping the price target unchanged at $12.

The brokerage noted that the stock is up 120% in the last three months, partly due to Trump’s victory in the US presidential election and favorable third-quarter results.

Indeed, SoFi reported strong financials during the third quarter, registering a 25% rise in net interest income to $431 million and a 38% jump in non-interest income to $266.11 million.

Net income for the quarter stood at $60.75 million compared to a net loss of $266.68 million in the same quarter a year ago.

The management also raised its full-year guidance, expecting to deliver adjusted net revenue of $2.535 to $2.550 billion, $85 million higher than the prior guidance range of $2.43 to $2.47 billion.

Adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) of $640 to $645 million, above prior guidance of $605 to $615 million.

Meanwhile, BofA also indicated that although recent execution was "solid," valuation is ahead of the firm’s fundamentals after the surge in stock price.

Despite the downgrade, retail sentiment on Stocktwits inched higher into the ‘neutral’ territory (53/100) from ‘bearish’ a day ago.

SOFI’s Sentiment Meter and Message Volume as of 11:00 a.m. ET on Dec. 9, 2024 | Source: Stocktwits

However, retail chatter on Stocktwits mainly indicated positive takes on the stock.

SoFi shares have outperformed the benchmark U.S. indices, having gained over 60% on a year-to-date basis.

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