The Student Loan Moratorium Could Get Extended Again. That Would Be Very Bad for SoFi in 2022
Recently, Morgan Stanley analysts Betsy Graseck and Jeffrey Adelson downgraded SoFi (NASDAQ: SOFI) from an overweight to an equal weight rating. The two analysts also significantly trimmed their price target on the one-stop-shop financial services company from $18 to $10. The main reason for the downgrade is that the two now expect the federal student loan moratorium, which has already been extended twice and is supposed to expire on May 1, to be extended yet again.
Graseck and Adelson said in their report that the moratorium could now extend all the way until 2023. If that's the case, that would be very bad for SoFi's outlook in 2022. Here's why.
SoFi offers many products, including cash-management accounts, online investing, and various lending products, including credit cards, personal loans, mortgages, and student loans. The lending business is easily the greatest contribution to revenue and profit at the company. In 2021, the lending division generated nearly $12.7 billion of originations, contributing nearly $764 million of its more than $1 billion of total adjusted revenue. It also added almost $400 million in profit, again far surpassing SoFi's other two divisions.
Source Fool.com
