Shares of SoFi Technologies (SOFI) experienced a 3.6% increase on Monday, ending the day at $19.24. This rise in stock price is attributed to investor reactions to recent policy changes proposed by President Donald Trump. His new tax plan seeks to impose stricter limits on federal student loans, which could lead more students to turn to private lenders such as SoFi. This development is particularly timely as the company approaches its second-quarter earnings report scheduled for July 29, generating significant interest among investors. Over the past three months, SoFi’s stock has surged more than 100%.
Trump’s tax proposal, which has already been passed by the Senate and awaits a vote in the House, aims to decrease the cap on federal graduate loans. If implemented, this could restrict the borrowing capacity of students, creating an opportunity for private lenders to fill the financial gap in higher education. SoFi, renowned for its offerings in student loans and refinancing, is strategically positioned to capitalize on this shift in the market. Investors are optimistic that a reduction in federal support will drive more borrowers to SoFi, further enhancing loan volumes and growth prospects.
As the company prepares to announce its second-quarter results, expectations are running high. Following a robust first quarter—where revenue increased by 20% and earnings surged by 200% year-over-year—analysts anticipate SoFi will report earnings of $0.06 per share, marking a 500% increase from the same quarter last year. However, revenue is forecasted to decline approximately 7% from last year to around $801.8 million.
With the proposed tax legislation bringing student lending into sharper focus, analysts will be particularly attentive to SoFi’s performance in this segment. A positive earnings report could bolster the stock further, aligning policy support with the company’s strong business fundamentals.
On the investment front, Wall Street maintains a Moderate Buy consensus rating for SoFi Technologies, reflecting seven Buy, five Hold, and two Sell recommendations. The average price target for SOFI stock is noted to be $14.85, indicating a potential downside risk of 22.82% from current levels.
Overall, while there are concerns regarding revenue projections, the potential for growth in private student lending markets presents a hopeful outlook for SoFi Technologies, assuming favorable developments in policy and market conditions.