SoFi stock plunges after Biden extends moratorium on student loan payments
SoFi offers private student loans and refinances to undergraduate students and their parents as well as graduate students. The White House’s decision to extend the federal moratorium on student loan payments from May 1 to August 31 will reduce sales and profits, the company said.
Additionally, the company said in a statement late Wednesday that it expects the moratorium to be extended again. SoFi now believes that “the looming midterm elections in the fall will likely precipitate a seventh extension beyond August.”
For that reason, SoFi said its annual outlook “now assumes that the student loan moratorium will not in fact end sometime in 2022.”
As a result, SoFi is cutting its 2022 adjusted sales and earnings guidance to $1.47 billion and $100 million. Its previous forecast called for revenue of $1.57 billion and profit of $180 million.
“SoFi remains incredibly well positioned to deliver continued strong revenue, membership and revenue growth, as well as continued and improving profitability, despite the fact that our student loan refinance business operated at less than 50% of pre-Covid levels for the last two years,” Noto said in a statement.
“SoFi has done an outstanding job of achieving record financial results, member and revenue growth, and consistent profitability, despite the negative impact of the extended student loan payment moratorium,” Noto added. “We will work diligently to continue this trend in 2022.”
At least six analysts cut their price target on SoFi shares after cutting its outlook, according to data from Refinitiv.