Why SoFi Is Cutting Guidance for 2022

The financial-services company SoFi (NASDAQ: SOFI) recently announced it's cutting its earnings guidance for 2022. SoFi had previously told investors that it expected to generate $1.57 billion of revenue and $180 million of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the year. Now it has chopped those numbers to $1.47 billion of revenue and EBITDA of $100 million. Here's why.

SoFi is a big player in student-loan refinancing. Recently, the White House officially extended its pause on most federal student-loan payments, which has been in place since the pandemic began in March 2020. The student-loan moratorium was supposed to expire in May after several extensions, but now the moratorium will be extended until the end of August.

Before the pandemic, student lending was SoFi's largest lending category. The fintech did nearly $6.7 billion of student-loan originations in 2019, many of which were borrowers refinancing their loans. But with student-loan payments on hold for a while now, borrowers are less incentivized to refinance. Student-loan originations at SoFi only came in at about $4.3 billion in 2021.

Source Fool.com