SoFi Technologies (NASDAQ: SOFI) silenced skeptics this morning by reporting “blockbuster” Q4 results that saw revenue surpass the coveted “$1 billion” mark for the first time.
The financial technology specialist posted an adjusted profit of 13 cents per share. This was well above the 11 cents per share that experts had expected.
Still, SOFI stock is still down more than 25% from its November high.
Much of this hangover is related to a “massive” $1.5 billion capital increase the company announced last month that raised dilution concerns.
But in an interview with CNBC this morning, CEO Anthony Noto insisted the hike was “misunderstood” as it may just prove the secret sauce to SOFI’s long-term control.
Why a capital raise is actually good for SoFi stock
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While markets often initially react to stock offerings with a sell-off due to concerns about dilution, Noto acknowledged that the capital increase was purely “opportunistic” and not an emergency response to running out of cash.
In fact, it immediately “increased our visible book value” by $2 per share to $7 overall, he added.
abovesquawk box”, the chief executive said, adding that the latest funding represents “improved flexibility” for the Nasdaq-listed company to “drive faster growth” through new products and strategic deals that “strengthen” its foothold against rivals.
By doubling the statutory leverage ratio, fintechs now have “options to grow in all directions,” including aggressively expanding their lending platforms and reducing high-cost debt to improve profit margins.
And that is most certainly bullish for SOFI stock, he concluded.
Noto’s take on why SOFI stock is worth owning
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CEO Anthony Noto touted SoFi stock as follows: CNBCHe said the company is in a “unique” position to benefit from tailwinds from both artificial intelligence (AI) and cryptocurrencies.
According to him, both blockchain and AI are “technology supercycles” that will define the next decade.
SOFI is increasing efficiency by integrating AI into its underwriting operations through the Galileo and Technisys platforms, and its recently launched integrated cryptocurrency trading is meeting the huge demand of its members.
Noto’s vision is to become a “one-stop shop” where advanced AI-driven financial advice meets the frontier of digital assets, creating a diverse ecosystem that traditional banks cannot match.
How to play SoFi Technologies after Q4 earnings
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The case for owning SOFI stock is probably stronger now than it was at its peak in November.
The company is projecting $4.66 billion in revenue and 30% membership growth in 2026, and its growth engine is truly “firing on all cylinders.”
SoFi Technologies is expensive compared to traditional banks, with a price-to-sales (P/S) multiple of less than 9, but cheap compared to its high-growth technology peers, given its 160% year-over-year EPS growth in the fourth quarter.
Between the expansion of its “loan platform” business, which allows SOFI to earn fees without taking on balance sheet risk, and the large capital cushion Noto now has at its disposal, the company is perfectly positioned to take full advantage of the stable interest rate environment.
To investors, “dilution” may soon seem like a small price to pay for a fortress’ balance sheet.
