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SoFi Technologies Inc. Shows Promise Amidst Challenging Week, Investors Advised to Be Cautious

StockInvest.us, 1 month ago

SoFi Technical Analysis

SoFi Technologies, Inc. (SOFI) closed at $7.89 on January 12, 2024, representing a 3.43% decline from the previous closing price. The stock fluctuated between $7.81 and $8.30 during the day, with a current year high of $11.70 and a year low of $4.45. The market capitalization stands at $7.56 billion with 487.54 million shares traded, surpassing the average volume of 42.50 million.

The stock's Relative Strength Index (RSI) of 30 suggests that SOFI might be reaching oversold territory, indicating a potential reversal or corrective price movement to the upside could be imminent. The price is currently below the 50-day moving average of $8.15 and just above the 200-day moving average of $7.75, showing a bearish short-term sentiment but potentially finding support at the 200-day mark.

The Moving Average Convergence Divergence (MACD) of 0.51 signals a recent bearish momentum, though it could also be indicative of a forthcoming positive crossover should the stock stabilize or increase in price. The Average True Range (ATR) value of 5.96 suggests high volatility in the stock's movement.

Considering the technical support level at $6.94 and the resistance at $8.17, any push upward by buyers might challenge the resistance, and if it breaks, the stock may rise towards a more bullish trend. Conversely, continuing selling pressure that drives the price below the support level could extend the current bearish trend.

Fundamental Analysis

Despite a challenging week, SoFi Technologies Inc. shows promise based on its growth strategy that focuses on an all-digital banking experience addressing consumer pain points. The analyst downgrade that prompted the stock's 16% decline last week raised concerns over valuation and potential growth hindrances due to falling interest rates. However, recent reports suggest that there's disagreement among analysts about the future of SOFI, with the primary bearish argument appearing to center on valuation rather than company performance.

SoFi SoFi's aggressive expansion approach is said to generate solid growth trajectories and edge closer toward net profitability, despite recent news of a 7% workforce layoff. It appears as though the company's management is taking decisive action to streamline operations and financials in pursuit of profitability.

Earnings per share (EPS) are reported at -$0.45, with a price-to-earnings (PE) ratio of -17.53, reflecting a company that is currently not profitable. Investors are eagerly awaiting the earnings announcement due on January 29, 2024, to gauge company performance and forward guidance.

Consensus analyst ratings suggest a 'Buy' opinion, reinforced by 6 buys and 4 holds, with the target price consensus at $9.88 and a median at $8.00. Targets range from as high as $22 to as low as $2.50, indicating considerable divergence in expectations.

Stock Performance Prediction

Analyzing the recent news and the upcoming earnings announcement, there's an anticipation of volatility in SOFI's stock price. The fundamental changes, such as the potential of interest rates cut, may drive growth in consumer lending, thus benefiting SoFi. For the next trading day on January 16, 2024, given the oversold technical condition, investors might see a positive reaction as the stock could correct towards the moving averages. For the upcoming week, the stock performance will heavily depend on any emerging news and market sentiment leading up to the earnings report.

Overall Evaluation

Based on the combination of SOFI's current technical indicators and fundamental analysis, the stock categorization leans toward a 'Hold' with bullish tendencies. This recommendation is primarily due to the company's solid growth strategy and its move toward profitability against the backdrop of a potential oversold technical position. However, with the earnings announcement on the horizon, investors are advised to maintain a cautious approach due to potential volatility around such events. A reevaluation post-earnings announcement is necessary to make more informed decisions with regards to holding, buying, or selling the stock.

Check full SoFi forecast and analysis here.