Is There Any Reason to Buy SOFI Stock Now?

Source: Poetra.RH /

SoFi Technologies (NASDAQ:SOFI) made headlines with a robust Q3 report, reaffirming its status as a top fintech stock. SOFI stock added 717,000 members, marking a 47% year-over-year increase. Beyond its roots as a student lender, SoFi has evolved into a comprehensive financial services hub. 

The quarter witnessed a significant $2.9 billion deposit growth, crucial for a consumer bank’s relevance. This influx enables extending loans and earning interest, contributing to a 100% year-over-year increase in net interest income, reaching $345 million.

Insider Sells SoFi Stock Holdings

Recent news has come that Chief Risk Officer and Global Head of Operations & LatAm, Aaron Webster, made a significant sale of $1.7 million worth of stock at $8.08 per share, reducing his holdings by 31%.

On November 3, 2023, SoFi’s Chief Risk Officer, Aaron Webster, executed the sale of 215,299 company shares. This transaction is part of a series of insider dealings observed over the past year. Webster, in his capacity, oversees risk management, aligning company operations with risk strategy and exerting substantial influence on financial health and stability.

Of course, other insiders, including CEO Anthony Noto, have been buying SOFI stock, albeit at a lower level. Thus, it’s unclear how clear of a signal these insider transactions provide, but they are worth pointing out for investors looking for near-term market signals.

Growth Remains Strong

The company demonstrates strong performance by capitalizing on the growing demand for unsecured loans and the surge in student loan refinancing post-moratorium. Recent quarterly results, disclosed on October 30, showcase SoFi’s continuous growth in membership and deposits, enhancing its capacity for new loans and moving closer to achieving positive GAAP earnings as targeted by management.

Despite potential growth catalysts, skepticism lingers regarding SoFi’s valuation, a concern that might persist. Established and profitable fintechs have seen market downturns, aligning their valuations more closely with traditional banks than the higher multiples typical of tech stocks, a trend unlikely to reverse.

Moreover, despite positive sentiments in the industry, investor disinterest persists in bank stocks. Earlier this year, concerns about rising interest rates affecting existing loan portfolios led to declining bank shares, and these apprehensions haven’t entirely dissipated. Furthermore, worries about a potential 2024 recession and its impact on the banking sector’s performance in the coming year add to the concerns.

SoFi is a Fintech Stock Worth Buying

Despite its lack of profitability, SoFi’s core business remains robust. The company’s management team anticipates increased revenue, raising the outlook to $2.04 billion to $2.06 billion for the year after the Q3 report.

Trading around $7 per share, SOFI stock is up nearly 50% year-to-date but could see much more impressive gains over the long term if the company can execute its long-term growth strategy.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

Source link

Share with your friends!

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the latest stocks updates
straight to your inbox

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.

Thank you for subscribing.

Something went wrong.