Despite the gloomy markets, SOFI has continued to invest and become a major player in the fintech industry
SoFi Technologies$SoFi Technologies Inc.(SOFI)$ stock is down 55.37% in the year thus far, making it one of the many tech stocks that have lost considerable steam due to economic headwinds. However, after the company has lost so much value, there are reasons to believe it’s a deep value play.
SoFi Technologies is a company that uses AI to help people with personal finance. It uses machine learning and natural language processing to understand the financial situation of the users.
SoFi has been gaining popularity in recent years, as more and more people are turning towards technology for financial assistance. Mike Cagney founded the company to create a fulfilling experience for customers; he saw the need to offer AI-based solutions.
However, due to the larger issues in the lending space, SOFI stock is under pressure. The Biden administrationagain decided to extend the pauseon student loan payments. One of the biggest sources of revenue for SoFi is generated through refinancing educational debt.
In response, SoFi has revised its outlook downwards. The company expects adjusted net revenueto come towards $1.47 billion, down from the earlier outlook of $1.57 billion. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) is now slated to top $100 million, versus the earlier forecast of $180 million.
Therefore, this news was another reason to stay away from SOFI stock. However, considering the valuation of SOFI stock, there is reason to purchase at these levels.
Is SOFI Stock a Buy?
SOFI stock has been falling steadily since November last year, leaving many of its excited investors who saw their assessment as a safe bet with their dreams crushed in the process. Sentiment across multiple industries is dipping,and rising interest rates are beginning to weigh downthe overall environment. The latest news added to the woes, leading to renewed fears regarding its future.
Despite the gloomy markets, SoFi has continued to invest and become a major player in the fintech industry. Anthony Noto, CEO of SoFi,sees possibilities for the fintech companyto operate in the financial technology space similar to how Amazon Web Services (AWS) operates in other markets. They want to be a key player first and then take up as much market share as possible.
I have talked about the bank charter approvaland how that will help the company move forward. However, it’s important to reiterate that it will go a long way in ensuring that its revenues are diversified. Eventually, the company plans on further developing itsbanking-as-a-service (BaaS) platform to take onsome of the traditional banking industry’s core features. The bank charter will help immensely in this regard.
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