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SoFi Technologies, Inc. (SOFI) shows signs of indecision with possible oversold conditions

StockInvest.us, 1 month ago

SoFi Technical Analysis

SoFi Technologies, Inc. (SOFI) exhibited a bearish behavior in the last trading session, closing at $7.53, a decrease of 2.46% from the previous close. The stock oscillated between a day's low of $7.37 and a high of $7.58, indicating intra-day volatility. SOFI's price is currently below its 50-day moving average ($8.15) and is tentatively holding above its 200-day moving average of $7.77, hinting at a possible indecision in trend direction.

A key technical indicator, the RSI (Relative Strength Index), is at 22, suggesting that SOFI might be oversold. Investors often consider an RSI below 30 to be a sign that the stock may be undervalued and due for a rebound. However, RSI alone is not a definitive predictor of short-term price movements.

The MACD (Moving Average Convergence Divergence) stands at 0.20, which typically denotes positive momentum, but in the context of other indicators, may not be a strong bullish sign. The ATR (Average True Range) for SOFI is approximately 5.98, reflecting a significant amount of volatility in recent trading sessions.

With a support level at $6.94 and resistance at $7.89, SOFI may face a test of these price ranges in coming trading days. Breaking the resistance with significant volume could signal bullish momentum, while a drop below support may reveal further bearish sentiment.

Fundamental Analysis

Fundamentally, SOFI's market capitalization sits at approximately $7.22 billion, with 958.74 million shares outstanding. The company currently operates at a loss, holding an EPS of -$0.45 and a negative PE ratio of -16.73, signaling that investors are likely concerned with its profitability in the near term.

SoFi The company anticipates its earnings announcement on January 29, 2024, which could serve as a catalyst for the stock's movement in either direction, depending on whether the financial results meet, exceed, or fall short of market expectations.

Recently, SOFI has been highlighted for its impressive growth in 2023, which saw an 85% rise in stock price driven by record revenue and member growth. This optimistic outlook is further supported by the fact that SOFI successfully capitalized on the end of student loan forbearance, adding 480,000 members and 847,000 products in Q3. This evidences strong cross-selling capabilities and customer retention, which could be bullish signs for the company's future revenue streams.

Analysts' target prices for SOFI exhibit a wide range, from as low as $2.50 to as high as $22.00, with a target consensus at $9.88 and a median target of $8.00, indicating room for potential upside from its last close. The analyst consensus opinion is a "Buy" with 6 buys, 4 holds, and 3 sells.

Short-term Outlook

In analyzing the data for the next trading day and the upcoming week, one could consider the stock to potentially rebound after the oversold condition signaled by the RSI. However, caution is warranted given the overall market sentiment and the proximity to earnings announcement, which could introduce volatility.

Overall Evaluation

Taking into account the technical indicators, the fundamental growth prospects, and recent positive developments for SOFI, the recommendation would be to Hold. Investors may consider maintaining their positions to see how the earnings report impacts the stock while monitoring the resistance and support levels closely.

Short-term traders may benefit from the high volatility, but should proceed with caution as the market digests the company's fundamental progress and awaits clearer signals either from the earnings report or from market movement to confirm the existing trend direction. The hold recommendation is mainly preventive, ensuring that shareholders could benefit from potential upside while remaining vigilant of changing market conditions.

Check full SoFi forecast and analysis here.