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: SoFi stock falls after outlook cut, executives expect student-loan moratorium to be extended through 2022

Following an extension of the federal student loan moratorium, SoFi Technologies Inc. trimmed its outlook for the full fiscal year Wednesday, with executives now assuming the moratorium will last at least through the rest of the year.

SoFi executives now expect to record $1.47 billion in adjusted net revenue for the year, along with adjusted earnings before interest, taxes, depreciation, and amortization (Ebitda) of $100 million. SoFi’s
SOFI,
-4.06%

prior forecast called for $1.57 billion in adjusted net revenue and $180 million in adjusted Ebitda, both of which are non-GAAP metrics.

“Management now expects that a number of factors including the impending fall midterm elections will precipitate a likely seventh extension beyond August 2022 by the administration,” SoFi said in a Wednesday release. “Accordingly, management’s updated 2022 guidance assumes that the student loan moratorium will not in fact end during the course of 2022.”

Shares of SoFi were off about 6% in after-hours trading Wednesday. The stock closed with a 4.1% decline, and has dropped 44.7% so far this year, as the S&P 500 index
SPX,
-0.97%

has fallen 5.1%.

Back when SoFi reported its fourth-quarter earnings in early March, the company had said that its outlook assumed that the moratorium on student-loan payments would expire at the start of May and that student-loan refinance originations would return to prepandemic levels midway through the second quarter.

The Biden administration said Wednesday that it was extending the pause until Aug. 31, pointing to data from the Federal Reserve suggesting that “millions of student loan borrowers would face significant economic hardship, and delinquencies and defaults could threaten Americans’ financial stability” were the payments to resume in May.

Several analysts seemed to agree with SoFi about the likelihood that the administration would push for another extension beyond August as a pre-election overture.

See also: ‘Cancel student debt. All of it.’ — Politicians react to Biden extending student loan payment through August

SoFi is keeping its original first-quarter outlook, which called for $280 million to $285 million in adjusted net revenue, as well as adjusted Ebitda ranging from break-even to $5 million. That original outlook assumed that the moratorium would extend through the first quarter, as it did.

Separately, the company announced that several of its board members plan to step down. Clay Wilkes, who founded the Galileo Financial Technologies business that SoFi acquired in 2020, is leaving the board of directors immediately. Michel Combes and Carlos Medeiros, both of SoftBank Group Corp.
9984,
-2.81%
,
will step down as of the company’s next annual shareholders meeting.

“Clay, Michel, and Carlos have provided crucial guidance to the board and the management team as the company expanded into new products, raised significant capital, made a critical strategic acquisition, transitioned to being a publicly-traded company and received a national bank license,” Chief Executive Anthony Noto said in a release. “Given all that we have accomplished, this marks a natural point to continue the transition of our board in regards to its size and composition over time.”

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