SoFi Is Just Getting Going. The Stock Is Rising.

Last month, Truist initiated coverage of SoFi at Buy, calling it the future of U.S. banking. The company began as a lender focused on refinancing student debt, and its acquisition of Technisys SA last year helped transform it into a full-service bank.

SoFi stock climbed 11% to $9.06 in Monday trading, and so far this year, it has gained 96%. That being said, analysts have mixed views on the company—of those surveyed by FactSet in June, 53% rate it at Buy, 41% at Neutral, and 6% at Sell.

“Although still controversial, we believe SoFi’s efforts to educate investors about its strategy, liquidity, fair value accounting, financial model and credit quality are paying dividends,” Truist analysts wrote. 

They believe the stock’s recent strong performance illustrates growing appreciation for the opportunity to snap up deposit share and channel that liquidity into high return-on-equity loans. Debt ceiling legislation ending the pause on student loans is also viewed as a positive. 

On May 1, SoFi posted a narrower-than-expected net loss for its first quarter, but investors seemed to take its stellar first-quarter personal loan origination numbers as a warning of losses going forward, according to one analyst, and shares tumbled 12% that day, according to Dow Jones Market Data. 

And in a 10-Q filed last month, the company wrote that if it isn’t able to achieve profitability in 2023 as anticipated, it may raise additional capital in the form of equity or debt. Truist analysts aren’t concerned, writing they believe the company will notch a small profit in its fourth quarter. They think the company is approaching a critical profitability inflection point.

Analysts also highlighted potential in student loans, adding that SoFi stands to benefit from the large bank deposit loss, citing its app, small size, and high interest rates on savings accounts.

Write to Emily Dattilo at emily.dattilo@dowjones.com