SoFi Has Massive Loss in Second Quarter
SoFi had a second quarter adjusted loss of about $200 million, according to a Bloomberg story from yesterday, citing people familiar with the company’s situation.
“Our Q2 financial results were negatively impacted by significantly lowered valuation of legacy loans and assets as well as the slow start to increasing prices in the face of a rising interest rate environment,” the company said in a second-quarter shareholder letter from August 3, that was obtained by Bloomberg.
At the beginning of July, the Wall Street Journal reported that SoFi had been meeting with banks to discuss raising a roughly $500 million unsecured line of credit that could go toward potential buyouts of other fintech firms.
As of the start of the year, the student loan company, which also offers other financing products, postponed an IPO to 2019. And in October 2017 it withdrew an FDIC application to obtain a special purpose (ILC) bank charter. This came amid a sexual harassment allegations against the company’s co-founder and then CEO Mike Cagney.
In March of this year, Anthony Noto, formerly at Twitter and Goldman Sachs, replaced Cagney as CEO. In Noto’s first shareholder letter as CEO in May, he said that SoFi originated $3.6 billion in loans in the first quarter of 2018, a 27 percent increase from 2017. He also said that the company added about 59,000 members in the quarter, most of them borrowers, bringing the total number close to 500,000.
Additionally, Noto wrote in the May letter, obtained by CNBC, that the company’s “SoFi at Work” program, which partners with companies to help their employees pay off student loans and other debt, expanded its funded loan volume by 118 percent from last year.
SoFi also offers mortgage products, but had to let go of 65 employees from its mortgage operation at the beginning of 2018. Founded in 2011, the company is based in San Francisco and employees more than 1,000 people.Last modified: August 7, 2018
Todd Stone is a reporter for deBanked.