shares of SoFi Shares of the company plunged more than 15% on Wednesday after the company declined to raise its full-year outlook. CEO Anthony Noto said the move reflects macro reality rather than weakening fundamentals.
“The reason we didn’t raise our full-year guidance is because when we originally gave our full-year guidance, we expected the Federal Reserve to cut rates at least twice,” he told Jim Cramer. “And right now we’re assuming no rate cuts.”
The digital finance company reported results that were mostly in line with expectations, with earnings of 12 cents per share and net revenue of $1.09 billion. Investors focused on the unchanged outlook despite what Noto described as a “remarkable” quarter, including hitting the “Rule of 40” target for the 18th consecutive quarter.
Mr. Noto said that this decision highlights a change in macro assumptions, rather than a deterioration in the business itself.
“I don’t think it’s a wise move to raise the bar in an uncertain environment, including interest rates and the situation in the Middle East,” he said.
The more cautious stance comes despite SoFi’s continued strong growth, including 41% revenue growth and 31% profit margins, as well as continued growth in membership and product adoption. The company also generated cash revenue of more than $1 billion for the second consecutive quarter.
“We’re really firing on all cylinders,” Noto said.
