S&P 500   3,852.36
DOW   32,920.46
QQQ   306.18
Europe bans Russian diesel, other oil products over Ukraine
Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
Route to Super Bowl dangerous for Mexico's avocado haulers
Biden's State of the Union to tout policy wins on economy
Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
Evacuations urged in Ohio town as train wreck smolders
How will EU ban and West's price cap on Russian diesel work?
Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
It wasn’t me: Ex-UK PM Truss blames 'system' for her failure
'Knock at the Cabin' knocks off 'Avatar' at the box office
S&P 500   3,852.36
DOW   32,920.46
QQQ   306.18
Europe bans Russian diesel, other oil products over Ukraine
Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
Route to Super Bowl dangerous for Mexico's avocado haulers
Biden's State of the Union to tout policy wins on economy
Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
Evacuations urged in Ohio town as train wreck smolders
How will EU ban and West's price cap on Russian diesel work?
Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
It wasn’t me: Ex-UK PM Truss blames 'system' for her failure
'Knock at the Cabin' knocks off 'Avatar' at the box office
S&P 500   3,852.36
DOW   32,920.46
QQQ   306.18
Europe bans Russian diesel, other oil products over Ukraine
Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
Route to Super Bowl dangerous for Mexico's avocado haulers
Biden's State of the Union to tout policy wins on economy
Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
Evacuations urged in Ohio town as train wreck smolders
How will EU ban and West's price cap on Russian diesel work?
Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
It wasn’t me: Ex-UK PM Truss blames 'system' for her failure
'Knock at the Cabin' knocks off 'Avatar' at the box office
S&P 500   3,852.36
DOW   32,920.46
QQQ   306.18
Europe bans Russian diesel, other oil products over Ukraine
Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
Route to Super Bowl dangerous for Mexico's avocado haulers
Biden's State of the Union to tout policy wins on economy
Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
Evacuations urged in Ohio town as train wreck smolders
How will EU ban and West's price cap on Russian diesel work?
Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
It wasn’t me: Ex-UK PM Truss blames 'system' for her failure
'Knock at the Cabin' knocks off 'Avatar' at the box office

Is The Recovery Rally Here For SoFi?

Key Points

  • Shares of fintech lender SoFi rallied Wednesday, but problems surrounding the student loan payment pause and crypto could slow growth.
  • Wall Street has a "moderate buy" rating on the stock.
  • Analysts see the trend of narrowing losses continuing into next year. 
  • 5 stocks we like better than SoFi Technologies
Is The Recovery Rally Here For SoFi? A pause in student loan repayments and the crypto meltdown are among the problems affecting lender SoFi (NASDAQ: SOFI)

But shares rallied along with the broader market Wednesday. Could it be that the bottom is in? 

The online banking company went public with great fanfare in June 2021, via a merger with SPAC Social Capital Hedosophia. 

Its primary customer base consists of people who skew toward the young, high earning demographic. SoFi aims to offer a wide range of financial services to this market. The idea is that customers will want to bundle most or all of their financial products and services with SoFi. 

The stock briefly ran up in the weeks following its Nasdaq debut but began correcting late that same month. A year ago, SoFi’s price came within 1.2% of its post-debut high. After that, shares rolled over and haven’t staged a sustained uptrend since then, although there have been a few shorter, tradeable rallies.

SoFi’s performance over rolling time frames looks pretty dismal, with returns as follows:

  • 1 month: -16.33%
  • 3 months: -24%
  • Year-to-date: -71.16%
  • 1 year: -75.26%

But despite the carnage, analyst data compiled by MarketBeat show a consensus rating of “moderate buy” with a price target of $10, representing a 107.04% upside.  

The company is not yet profitable, but revenue has been growing at double-digit rates in the past seven quarters. Its three-year annual growth rate is 46%. 


Losses Narrowing 

Analysts are optimistic about the company’s ability to continue narrowing its losses. SoFi lost $2.56 per share in 2020, which dropped to a loss of $1 per share last year.

For the full year, Wall Street expects SoFi to lose $0.43 per share, which is seen narrowing to $0.23 per share next year. 

That signals that concern about student loan payment revenue is fading. 

Prior to the pause, which was implemented in March 2020 at the beginning of the pandemic, student loan origination was SoFi’s largest source of revenue. That line of business has dwindled significantly since then. It’s likely to remain muted for the foreseeable future, as the payment pause was extended through June 2023. 

On the crypto front, the company recently received a letter from the Senate Banking Committee expressing concerns about the company’s crypto platform. 

SoFi received its banking charter this year, following its acquisition of Golden Pacific Bancorp. There was a conflict regarding SoFi’s Digital Assets business unit. This is a cryptocurrency brokerage, which is not permitted for companies holding banking charters. Regulators gave the company two years to divest the crypto division. 

The Senate’s letter focused on an expansion of the crypto platform. 

It’s not necessarily the case that SoFi won’t get into compliance in the near future, nor is it clear that the crypto platform will have an adverse effect on revenue or earnings. But it’s a regulatory issue that’s hanging out there.

Time For A Rally? 

Eventually, with any stock there comes a moment of capitulation that indicates a bottoming of price action. 

SoFi shares advanced 5.92% Wednesday, closing at $4.83. The stock sank to a session low of $4.41 on Monday. Being only two days out from its low, it’s tough to get too excited about one day’s strong price action, particularly as SoFi was likely swept up in news pertaining to the Federal Reserve’s possible slowdown of interest-rate increases.
Is The Recovery Rally Here For SoFi?

On the plus side, the “moderate-buy” rating may bode well, and signals institutional confidence in the stock going forward. The expected narrowing of losses is also encouraging. 

On the negative side, selling has been accompanied by higher trading volume. In addition, other than on Wednesday, there’s been little enthusiasm to stop the bleeding. While it may seem enticing to start buying shares when a stock is trading well off its previous highs, that can often be a recipe for disaster. 

Should you invest $1,000 in SoFi Technologies right now?

Before you consider SoFi Technologies, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and SoFi Technologies wasn't on the list.

While SoFi Technologies currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

7 Stocks to Buy And Hold Forever

Click the link below and we'll send you MarketBeat's list of seven stocks and why their long-term outlooks are very promising.

Get This Free Report
7 Stocks to Buy And Hold Forever Cover

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
SoFi Technologies (SOFI)
2.3717 of 5 stars
$7.46-3.4%N/A-18.65Moderate Buy$9.19
Compare These Stocks  Add These Stocks to My Watchlist 

Kate Stalter

About Kate Stalter

Contributing Author: Retirement, Asset Allocation, and Tax Strategies

Kate Stalter is a Series 65-licensed asset manager, with more than two decades of experience in various areas of financial services. As an investment advisor and financial planner, Kate personally manages client portfolios, with a focus on successful retirement, including asset allocation, income generation and tax strategies. Kate also serves as a capital-markets contributor at Forbes.com, and is an expert columnist for the investment advisory channel at U.S. News & World Report.
Contact Kate Stalter via email at stalterkate@gmail.com.

Featured Articles and Offers

Search Headlines: