- Despite the share-price drop, SoFi Technologies SOFI> stock has at least one Wall Street analyst in its corner.
- SoFi’s financials certainly aren’t perfect, but they do indicate improvement.
- Risk-tolerant fintech-market investors should consider adding a handful of SoFi shares while the price is low.
Headquartered in San Francisco, Calif., neo-banking leader SoFi Technologies SOFI> is an unapologetic disruptor in the banking market. For folks who don’t mind taking on some risk, SOFI stock offers dramatic potential upside from its currently heavily discounted price.
When SoFi Technologies went public on June 1, 2021, there was no shortage of hope and hype. Millennials and Zoomers wield tremendous influence as consumers, and they seem amenable to modernized banking modalities. Thus, upon its financial-market debut, SoFi seemed like the right neobank at the right time.
Yet, somehow the SoFi share price doesn’t necessarily match the company’s growth potential. Undaunted, at least one Wall Street expert is pounding the table in favor of SoFi, and the bullish argument is one you shouldn’t ignore.
What’s Happening with SOFI Stock?
Once valued at around $24, SOFI stock recently traded at just $7. 2022, so far, has been brutal to SoFi’s shareholders as both financial and technology stocks have fallen under heavy selling pressure.
This price action doesn’t really reflect how SoFi is doing as a business – or as an app, for that matter. In a survey of 6,000 consumers, SoFi’s app was rated as the best savings and investment app in the Overall Customer Experience category.
Time and again, SoFi sets itself apart from competing fintech platforms. For instance, the company just announced that SoFi Invest is rolling out extended trading hours (9:00 a.m. to 8:00 p.m. EST). It’s just another example of how SoFi is responsive to its users’ wants and needs.
SoFi Invest also offers cryptocurrency trading with 30 coins. Plus, the platform offers “automated (robo-advising) and active investing (trading) with no fees on stock trading or account minimums.”
Significant Earnings Momentum
By now, you might feel that SOFI stock ought to trade at a higher price. If so, then you’re definitely not the only individual who feels that way.
In defense of the high rating and price objective, Barker cited several potential macro-level headwinds.
“The combination of rapid growth in deposits, the expiration of the student loan moratorium, and revenue growth in the financial services segment should lead to significant earnings momentum throughout 2023 and 2024,” Barker explained. Presumably, the analyst was referring to the Biden administration’s extension to August of the pause on student loan repayments.
Barker’s bullish points are duly noted. To them, we can add that, during 2022’s first quarter, SoFi reported a 69% year-over-year revenue increase. In the same time frame, SoFi narrowed the company’s net earnings loss year-over-year from $177.56 million to $110.36 million. Hopefully, SoFi will someday succeed in closing that profitability gap.
What You Can Do Now
SoFi’s financial’s aren’t perfect, but we can discern improvement and that’s encouraging. Furthermore, Barker’s macro-level considerations seem to weigh in SoFi’s favor.
All in all, there appears to be a major disconnect between the SOFI stock price and the company’s true value as a disruptive force in fintech. Therefore, investors with a strong tolerance for risk can buy a few SoFi shares as $10 looks like a reasonable long-term price target.
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On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
SOFI shares were trading at $6.84 per share on Monday afternoon, down $0.14 (-2.01%). Year-to-date, SOFI has declined -56.74%, versus a -13.01% rise in the benchmark S&P 500 index during the same period.
About the Author: David Moadel
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets. More…