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SoFi Technologies Faces Challenges, but Stock Outlook Leans Toward a 'Buy'

StockInvest.us, 4 weeks ago

SoFi Introduction

SoFi Technologies, Inc., ticker symbol SOFI, operates on the NASDAQ exchange. SoFi Technologies is a digital personal finance company mapping a radical rethink of traditional finance according to consumer needs. On November 06, 2023, SoFi closed at $7.49, indicating a decline of $0.52 (-6.49%) compared to the previous trading day.

Fundamental Analysis

As of the last trading day, the company's market capitalization stood at $7.12 billion, with 957.86 million shares outstanding. The company's latest earnings per share (EPS) was recorded at -$0.45, making an unattractive price-to-earnings (PE) ratio of -16.51, showing the company is not making profits currently. Such negative ratios could potentially discourage investors from investing because it suggests the company is not generating enough profit relative to its stock price.

The recent news regarding insider selling by SoFi's Chief Risk Officer could potentially impact investor sentiment negatively. Insider selling often acts as a negative indicator, suggesting intimate knowledge of foreseeable operational, financial, or market-related challenges. The news of President Biden's plan for student loan debt relief may overshadow the negative implications of the Chief Risk Officer selling his shares, given SoFi's involvement in the student loan refinancing market.

Technical Analysis

The Relative Strength Index (RSI14) stands at 39, showing the stock is neither overbought nor oversold. The movement of the stock price with reference to the 50-day and 200-day moving averages shows a mixed short-term and long-term trend. The stock's price ($7.49) is below the 50-day moving average ($8.04), indicating a bearish short-term trend, while it is above the 200-day moving average ($7.34), suggesting a bullish long-term trend. The three-month Moving Average Convergence Divergence (MACD) is -0.20, pointing to a short-term selling signal.

SoFi From a technical perspective, SoFi stock currently experiences support at $6.94, while resistance is found at $7.55. This means that there is potential for the stock to decline if it breaks the support level or increase if it surpasses the resistance point.

Analyst Consensus

Analysts have set a high target price of $22, low of $2.5, and a median of $8. The consensus among analysts is a 'Buy' with 6 advising 'Buy', 3 advising 'Hold', and 3 advising 'Sell'. However, the discounted cash flow (DCF) suggests the stock's intrinsic value is about $9.00, slightly above the current price.

Stock Prediction and Evaluation

Considering the information mentioned above, while there are both positive and negative factors impacting SoFi's outlook, the overall consensus leans toward a 'Buy'. The company's involvement in potential areas of growth like student loan refinancing, combined with intrinsic value calculated by DCF at a healthy level relative to the current price, are notable strengths.

However, investors should watch the potential negative implications of insider selling and monitor the stock's ability to break the resistance level at $7.55. The company's negative earnings per share might be attributed to investment in growth, but it should be monitored closely.

For the next trading day, the technical indicators suggest a significant chance of the stock price moving in a narrow range between the support and resistance levels of $6.94 and $7.55, given neutral RSI and negative MACD. For the upcoming week, if no considerable changes to sentiment or fundamentals occur, a slight increase might be expected, bringing the price closer to the median target price ($8) set by analysts.

SoFi's stock is therefore categorized as a 'Hold' for now, but with potential for 'Buy' if positive catalysts such as corporate growth, profitability, and student loan reforms materialize.

Check full SoFi forecast and analysis here.