SoFi Just Reported Earnings. Is the Stock a Buy Now?

SoFi Technologies (NASDAQ: SOFI) just can't get any market love these days. The neobank continues to demonstrate outstanding performance, and its stock continues to drop. After its second-quarter results were released on Wednesday morning, with record revenue and profits, SoFi stock fell another 13% as of this writing.

Is this just a continuation of negative sentiment that won't vanish? Or is the stock ripe for buying at the current price?

The cross-buy strategy is working

SoFi is making its name as a major player in U.S. consumer banking. It continues to add new customers at a rapid pace, but it's also generating higher revenue through its cross-buy strategy. Management sees the company's differentiating factor as being a "one-stop shop" for all your digital banking needs, and as it onboards new customers and gets them to add new products, it's enjoying a flywheel effect of higher revenue and profits.

Here are some of the second-quarter highlights:

• Adjusted net revenue increased 40% year over year to $1.2 billion.
• Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 44% to $358 million.
• Adjusted earnings per share (EPS) rose 50% to $0.12.
• Record loan originations of $14.8 billion, up 69%.
• Member growth was 35%, with 1.1 million new customers.
• Product growth was 42%, with 2.2 million new products.

These last two points are important as they indicate the company's cross-sell strategy is working. Cross-buy accelerated to 51% in the quarter, with two new products for every new customer.

CEO Anthony Noto attributed this to the company's innovation engine. SoFi recently launched a slew of new products and features, like SoFi Coach, an artificial intelligence (AI) powered financial advisor, and Composer, a newly acquired investment AI agent.

Although SoFi is not an investment bank, it does offer investing services, and it was one of the five brokerages chosen for the record-breaking Space Exploration Technologies initial public offering (IPO). It's also participating in the high growth of large investment banks that benefited from strong equities activity in the second quarter, and brokerage revenue increased 141%.

Why the market's down on SoFi stock

It's not the first or even second time SoFi stock has dropped after an excellent earnings report. Usually, I'd say that as an expensive stock, there's so much priced into the stock that any imperfection will send it down. But at 19 times next year's earnings, SoFi looks quite reasonably priced for the kind of growth it's demonstrating.

What seems to have it riled up right now is that while management raised the full-year revenue outlook, it kept the profit outlook steady. Management says, however, that it now anticipates two rate hikes instead of two rate decreases, which drove its original guidance, and it's also plowing profits back into the business to capitalize on its opportunity.

I'm bullish on SoFi long-term, but if you do buy it now, be prepared for volatility along the stock's journey.

Jennifer Saibil has positions in SoFi Technologies. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.