Sign InSoFi Technologies (SOFI) Shows Positive Momentum and Growth Prospects, a Potential Investment Opportunity
Summary
SoFi Technologies, Inc. (SOFI) has shown a 4.13% rise in stock price and has the potential to enter the top 10 financial institutions in the country, but its financial health is a concern as it has yet to make a profit, although recent achievements and the upcoming end of the student loan moratorium present an opportunity for growth, making it a potentially profitable investment option. (Analysis conducted on July 11, 2023)
Fundamental Analysis
SoFi Technologies, Inc. (Ticker: SOFI) is a financial services company listed on the NASDAQ exchange. For the market day of July 11, 2023, the stock closed at a price of $9.07, which marked a 4.13% rise from the previous close. This aligns very well with recent news about the potential for this firm to enter the top 10 of financial institutions in the country, as stated by its CEO.
SoFi's market cap is around $8.53 billion, indicating a moderately-sized firm within the industry. However, the financial health of the company is a cause for concern. The company is yet to make a profit, with an EPS (Earnings per Share) of -$0.28 and a PE (Price to Earnings) ratio of -32.39. A negative EPS is generally a bearish indicator, as it reveals that the company is not profitable. Notably, the company's earnings announcement is anticipated for July 31, 2023. The company's recent achievements in lending and other related fields, as stated in news updates, seem to have been overlooked by the market. The upcoming lift of the student loan moratorium presents an excellent opportunity for the company to increase its revenues - a prospect eagerly awaited by the market.
Technical Analysis
SoFi's momentum appears positive with its shares registering a 4.13% gain on the most recent trading day, demonstrated by a close price that's above both its 50-day and 200-day moving averages, which are $6.92 and $5.88, respectively. Nevertheless, these developments were ostensibly expected and factored into the share price, according to industry news.
The stock's RSI (14) of 57 suggests that it is nearing an overbought level, pointing to an escalated level of investor interest. The MACD (3-month) denotes a positive trend, with a value of 0.51 suggesting a bullish pattern. From a trading activity standpoint, the stock's volume stood at 51.54 million which is roughly in line with its average volume of 52.49 million. This indicates an average level of investor interest.
The discounted cash flow (DCF), a measure of a company's intrinsic value, stands at $10.65, which is higher than the current price, suggesting that the stock may be undervalued. Interestingly, there seems to be wide disagreement among market analysts regarding the stock's target price. The consensus $10.12, however, is slightly above the current stock price; the low target is just $2.5, and the high target is a whopping $22.
Prediction
Given the current positive trend and news windfall about the firm's prospects, the stock is likely to gain on July 12, 2023, the next trading day. However, caution is needed due to the high RSI and the impending earnings announcement on July 31, 2023. Traders can expect SOFI to potentially hit its consensus target of $10.12 in the next week, offering a profitable trading opportunity.
Evaluation
Despite its present lack of profitability, SoFi Technologies offers promising growth prospects which, coupled with affordability and positive technical indicators, makes it a viable investment option in the near term. Therefore, it could be categorized as a BUY bearing in mind the associated risks like their upcoming earnings announcement and high RSI.
