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SoFi's Stock Positioned for Growth Despite Negative EPS and Technical Underperformance

StockInvest.us, 2 months ago

SoFi Fundamental Analysis

SoFi Technologies, Inc. (SOFI) has remained an active player in the financial technology sector, specifically in the student loan space. Their approach to student loans is evidenced by their recent surge in personal loan originations since the start of 2022, indicating an appreciable market prospect. Although the company's stock seems to have experienced a significant dip to $7.99 as of September 29, 2023, their performance is linked to the wider fintech industry, which is reaping the benefits of growing e-commerce trends.

In terms of the company's financial health, SoFi shows a negative EPS of $-0.26 which suggests that the company is not currently generating profits. This is also reflected in the negative PE ratio of -30.15. The market cap stands at $7.44 billion, and the average trading volume is around 19.38 million. The company has a substantial share count outstanding at 950.11 million.

However, investor sentiment according to the consensus from various analysts indicates a "BUY" disposition. With six (6) advocating for a "Buy", and three (3) each for "Hold" and "Sell" respectively, the bullish sentiment outnumbers those with more neutral or bearish positions.

Technical Analysis

On the technical front, SoFi's stock is currently trading under both the 50-day moving average ($8.7452) and 200-day moving average ($6.96), which could signal potential for growth but also suggests a degree of bearish momentum in the short term. The RSI14 is at 34, which is not in a typical overbought or oversold territory.

The MACD (3-month) of 0.008932 indicates a potential for price reversal in the future as it suggests that the short-term momentum is higher than the long-term momentum.

SoFi's price is nearly testing its support level at $7.95. If this level gets breached, the stock price could potentially trend lower. Conversely, the resistance at $8.34, if conquered, may suggest a possible uptrend.

SoFi Recent News Sentiment

Recent news reveals prominent Mad Money host Jim Cramer giving a nod of approval for SoFi Technologies, which could potentially shift market perception towards the stock. Meanwhile, the company's position in the fintech spectrum is, as has been highlighted, riding on e-commerce growth tailwinds.

Analysis Summary and Prediction

Given the fundamental and technical factors, along with recent news sentiments, SoFi's stock seems to be at an intersection. From a financial perspective, despite a currently negative EPS, the personal loan origination surge coupled with the endorsement by industry stalwarts like Jim Cramer indicates a potential for growth. On the technical side, though the stock is currently underperformance relative to its moving averages, the MACD suggests a potential price reversal.

Taking this into account, for the next trading day (October 2, 2023), there may be no significant change in the stock price due to the weekend pause. However, for the upcoming week, the price might see some fluctuations with a slight bullish trend if the resistance at $8.34 is broken, thanks to positive news sentiments and technical indicators.

Despite this, a level of caution must be adopted by investors due to market volatility and the upcoming earnings announcement on October 30.

Investor's recommendation

Considering all these factors, SoFi, at least for the short to mid-term, could be classified as a "Hold". While positive news sentiment and MACD potential price reversal indicate a bullish trend, the stock's underperformance relative to moving averages, coupled with a negative EPS and PE ratio, suggest caution. For investors with a longer-term perspective, the stock could potentially offer more considerable gains. Investors should keep an eye on the upcoming earnings announcement and further company developments.

Check full SoFi forecast and analysis here.