SOFI recently got a preliminary approval for a national bank charter this week, today we see it trading ~$14.
Why is the bank charter important?
Approval of the bank charter raises SOFI EBITDA forecasts from a variety of factors shown below
Below is a slide from a November presentation, I do believe that forecasts have changed for SOFI based on current fed rate expectations
Personal opinion:
SOFI has been a stock beat down by the drawdown of growth oriented stocks in the past quarter but at the current levels could be a solid buy for the short to medium term. Higher interest rate environments can also favor lending institutions from an increase in NIM leading to higher profitability, I am not sure if the forecasted EBITDA above is in line with fed rate expectations currently as I believe the slide came from a presentation back in November.
Some Observations of SOFI:
SOFI is a company with a lot of retail interest, commonly mentioned on WSB and reddit which can result in more volatility in the short term, This could make it an attractive option to swing trade based on volume levels.
A further drawdown in growth stocks could be a big headwind that could push the stock price further down, previously it was thought that $14 was the floor, but obviously it wasn’t.
Would love to start a discussion on SOFI here and get everyone’s thoughts
From a TA perspective, I’m curious if this news and bullish momentum puts SOFI “back on track” for the 6 month cycle swing play this has presented itself over the last year. April calls looked like it would be around where it could “peak” or begin to… Now that this news essentially changes (or adds to) the industry metrics SOFI is in, are we now looking at a new trend being established here altogether?
tldr; Are people looking for a new trend being established here or a continuation of prior trends as it falls back into historical support ranges again?
I wouldn’t aim this high with current market position. Should compare to other fintechs to get a reference:
AFRM
LC
ML
SQ
HOOD (although this dipped regardless of market news)
UPST
Interest talks by the fed, jobs report and anything remotely affecting inflation with good news is required to achieve this cycle again.
Interesting point, a difference from previous cycles this time is the catalyst event of having a preliminary approval for their bank charter approved. previous trends indicate that sofi could hit $25 in the short to medium term, but with growth stocks getting drawn down recently that also presents a pretty significant headwind.
but this 1-Yr trade and pattern was in pretty stable macro conditions. what i mean is Biden was in office, the fed was always threatening rate hikes, inflation was “transitory”. things have changed now. bank charter. rates are going up, most likely March, but could be earlier. also, a lot of insiders have sold their significant portions of their positions. student loan deferment is suppose to end in May.
like you stated, the pattern has just established very clear support and resistance ranges for me. this stock has traded over $20 at it’s peaks for weeks at a time so LEAPs above that price range look tasty. but IV is pretty high right now.
Just wanna keep $SOFI alive, it’s been good to me so far. With FY results scheduled for March 1, assuming the overall market continues it’s relative upward momentum (SPY opened at $430 Monday, closed at $441 today), we may be at the bottom of the pendulum now at the ~$11 mark. Sofi opened Monday at about $13, so it’s not directly correlating with SPY, but it may only be lagging behind. Last week SPY was at $445 when Sofi dipped under $15 and I have no negative news for them, only the positive of the bank charter, which should ostensibly raise future earnings predictions.
Previous estimates were based on student loan repayments resuming Jan 31, and we know that was extended to May. This may have some negative impact. I personally feel like it won’t be huge, given that they performed well since March 2020 when the Trump administration first paused student loan repayment, but I could be wrong.
Otherwise, sentiment for the company is strong on every analysis I’ve read; according to some articles the median analyst 1-year price target is $20. It was over $24.50 as recently as November, when SPY was in the $464 range.
Thank you @hansolo and @internetkings for the alternative views on this, extremely helpful and seems like others have similar thoughts here. Could markets really drag SOFI below $9s? Anything is possible I suppose.
I am sure it can, maybe it will - I am going in on some 9.50 CSPS 2/25’s if someone wants to pay 25 for them -
Puts my average @ 9.25 should I get assigned
The $1.1B purchase of Technisys is an all stock transaction, and they are issuing 84M new shares. Their current outstanding is 807M shares. To the extent that the share price is down only 3% and the dilution is about 10%, I think this shows the market is looking at this transaction favorably. In fact, if markets were not down 2%, SOFI might have been in the green, even!
SOFI started moving after hours yesterday, there were a couple filings I saw. One was the CEO buying some shares (not a lot), the other was extremely long and I couldn’t figure out what changed in it. Maybe someone smarter than I would like to check it out and report back.
