SoFi $5.60 upside in Bear Market. Not Bad !
With a volatile US market still in action since 19 Feb 2025, it was “nice” to hear that digital bank $SoFi Technologies Inc.(SOFI)$ still has a downwards revised target price of $20 per share.
Based on Mon, 24 Feb 2025 closing price of $14.36, this works out to be an upside of $5.64 or 38.36%, not bad at all.
The Details.
Growth names are taking a beating in the US market and writer Stephen Guilfoyle decided to buy more of SoFi, after a close look at the chart.
With the exception of a sell-off into earnings and a sharp rally, and then a sell-off and then another rally, shares of SoFi Technologies (SOFI) have more or less traded sideways for almost 3 months. (see below)
Apart from loading up on SoFi, Stephen has also bought the following stocks, after they have been slapped around like some kind of thief in the night:
On Wednesday...
On 19 Feb 2025, the St. Louis-based 8th US Circuit Court of Appeals found in favor of seven states that sued to stop the US Education Department (under the Biden administration) Saving on a Valuable Education (SAVE) program.
The court found the Department of Education had exceeded its authority by trying to use the Higher Education Act to increase student forgiveness at the expense of US taxpayers.
This should be a big plus for SoFi Technologies, for which student loan originations and re-financings are an important business.
How So ?
SoFi, could potentially benefit from the appeal’s court decision to block the SAVE program for several reasons:
(1) Increased demand for private student loans: With the SAVE plan blocked, borrowers may turn to private lenders like SoFi for refinancing options or new loans, as federal repayment plans become less attractive.
(2) Higher interest rates: The SAVE plan aimed to cap interest and provide more generous repayment terms. Without these benefits, borrowers might face higher interest rates on federal loans, making SoFi's competitive rates more appealing.
(3) Resumption of student loan payments: The court's decision may lead to the end of interest-free forbearance period for SAVE borrowers, potentially driving more customers to explore refinancing options with private lenders like SoFi.
(4) Reduced competition from federal programs: The blocking of SAVE eliminates a significant competitor to private student loan providers, potentially allowing SoFi to capture a larger market share.
(5) Increased investor confidence: The court's decision may be viewed positively by investors, potentially leading to a higher stock valuation for SoFi, as it removes uncertainty surrounding the impact of federal loan forgiveness on private lenders.
Above factors could contribute to increased business opportunities and potential growth for SoFi in the student loan market; that was originally its bread & butter.
New Products...
On Tue, 11 Feb 2025, SoFi announced more than 8 new benefits for SoFi Plus’s users, offering members more than $1,000 in annual value.
SoFi, CEO, Anthony Noto has said:
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With the new offerings from product - SoFi Plus, the fintech firm has created America's most rewarding financial membership-one that's more than just about products and services.
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It's about empowering SoFI’s members to realize their ambitions.
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SoFi Plus now delivers the strongest suite of premium benefits designed to meet our members where they are and help them get their money right.
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Sweetening the deal, SoFi was giving our members unmatched access to the resources they need to confidently shape their financial futures."
What is SoFi Plus ?
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It is a $10 monthly subscription service where members gain access to better interest rates, rewards and discounts.
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The subscription fee will be waived for members who sign up for direct deposit into a SoFi savings or checking account.
Three Weeks Ago...
On 27 Jan 2025, SoFi reported its Q4 2024 financial results.
Financial Numbers.
For the quarter that ended with the end of the calendar year, SoFi posted:
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An adjusted EPS of $0.05 (GAAP EPS: $0.29)
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On revenue of $734.125 million.
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Net interest margin reached 5.91%, up 34 basis points from Q3 2024.
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Fee-based revenue increased +63%, as SoFi reported its 5th consecutive quarter of GAAP profitability.
Both top- and bottom-line numbers bested Wall Street's expectations, with revenue print good enough for a +19.3% YoY growth.
Membership.
Record new member additions of 785,000 for the quarter brought total membership up to more than 10.1 million (+34%), as record new product additions of 1.1 million put total product sales at more than 14.7 million (+32%).
Financial Services products were up +34% and contributed 90% of the firm's total growth.
Lending Products were up +21%.
Technology Platform showed growth of +15%.
Outlook / Guidance.
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For the current quarter, SoFi projected an adjusted revenue of $725 million to $745 million, that was aligned with Wall Street consensus.
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For FY 2025, adjusted revenue was seen at $3.2 billion to $3.275 billion, also well above estimates.
Guilfoyle’s Technical Analysis.
He wondered if SoFi might be forming chart pattern "head-and-shoulders". (see above)
The pattern formation is important because it implies the stock price might go down soon.
If this pattern forms, it often means the stock price might fall (after the 3rd peak).
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For SoFi, if this pattern happens, the important price to watch is around $14.30.
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If SoFi falls below $14.30, it could be a sign that the price might keep going down.
Has SoFi entered into a basing period of consolidation, while remaining on trend?
SoFi’s stock price has been bouncing up and down recently. (see above)
It often touches the bottom line of a chart pattern, then moves back up to meet two important price averages.
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The averages are (a) 21-day EMA and (b) 50-day SMA, which help show the stock's recent price trends.
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And provides a “good” entry point.
Important Pointers.
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Target price: $20 (down from $23)
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Pivot: 50-day SMA (currently $15.70)
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Add: Down to the 200-day SMA (currently $10.40)
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Panic: Loss of 200-day SMA.
I wonder Trump’s confirmation via Truth Social that tariffs against Mexico & Canada will proceed as planned (next week) will be the “death-catalyst” to shape SoFi’s 3rd peak, heavens forbid !
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Do you think US market will plunge due to jitters over a tariff war, waged by senior Trump?
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Do you think SoFi is a long-term buy regardless of head and shoulders formation or not ?
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Looking at the chart, it was as described by writer.
The saving grace was SoFi managed to turned upwards on Wed, 26 Feb 2025. Looking at its pre-market indicator, it is supposed to continue to bubble up.
Given market's volatility, think SoFi is not out of the woods yet.
Then again, I am in for the long haul, not that particular yet especially when SoFi is still in the "green" for me..
What do you think ?
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