2022 Could Be a Whole New Ballgame for SoFi Technologies
SoFi Technologies (NASDAQ:SOFI) is really shaking things up in 2022, which can only be good for beleaguered SOFI stock.
In mid-January, the company announced it finally got approval from the Office of the Comptroller of the Currency and the Federal Reserve to operate a bank subsidiary, which will be called SoFi Bank. This is a big deal for the fintech, as it will allow it to “lend at even more competitive interest rates and provide our members with high-yielding interest in checking and savings,” CEO Anthony Noto said in a news release.
That’s a good business to be in right now with the Fed set to begin raising interest rates in March for the first time since December 2018. Remember, banks can charge more when they loan money in a higher interest rate environment. That’s why as the broader stock market shudders when the Fed starts hinting about raising rates bank stocks are usually a safe harbor.
SOFI Stock at a Glance
SOFI stock has been a disappointment since it began trading on the Nasdaq on June 1. It went public after completing a reverse merger with Social Capital Hedosophia Holdings Corp. V, a special purpose acquisition company.
Shares made a high just below $25 the following day. By mid-August, SOFI stock briefly dipped below $14. A recovery followed, with shares topping out above $24 in mid-November, following the release of the company’s much-better-than-expected third-quarter earnings report.
Adjusted revenue for the quarter came in at $277.2 million, up 28% year over year. And the company reported a loss of 5 cents per share versus the 14-cent per-share loss analysts were expecting. Management also raised its full-year guidance to more than $1 billion in revenue and $28 million to $31 million in adjusted EBITDA .
Investors’ post-earnings celebration was short-lived, though, and SOFI stock turned sharply lower again. Even the news of SoFi securing its long-awaited bank charter wasn’t enough to stem the selling. SOFI stock popped more than 24% in two days following the news. A week later, it made a fresh 52-week low at $10.51.
Yet, in the past two trading days, SOFI stock has run up nearly 20% on strength in the tech sector. This likely has some investors wondering whether SOFI stock has finally put in a bottom.
Analysts On Board With SOFI Stock
While the stock’s performance certainly leaves something to be desired, analysts have been cheering the company’s national bank charter.
Rosenblatt analyst Sean Horgan raised his price target from $28 to $30, saying the regulatory approval is “the moment we’ve all been waiting for.” Horgan said the bank charter will allow SoFi to outperform expectations over the next 12 months.
Mizuho analyst Dan Dolev maintained his price target of $17 for SOFI stock while calling the approval a “significant positive catalyst.” He said the bank charter improves SoFi’s credibility and should help lower its cost of capital.
Citi analyst Ashwin Shirvaikar maintained his “buy” rating and a $20 price target on SOFI stock. He said the bank charter is an important part of SoFi’s strategic plan to offer higher-yield products and increase its retail deposit base.
And that’s just a smattering of the positive comments.
According to TipRanks, seven of the 10 analysts covering SOFI stock rate it a “buy” and the average price target is $20.30. That’s 53% above the current price.
The Bottom Line on SOFI Stock
The sweet spot for any bank is to capture a customer’s full life cycle. Banks want to be there when you get your first savings and checking accounts, when you buy a car and when you get your first house. They want to be part of the conversation when you start saving for your child’s college education and your retirement. In other words, they want to handle your finances from cradle to grave.
SoFi hopes it can take another step toward that goal with a national bank charter. It’s too early to tell if this plan will help SOFI stock turn the corner, but I’m rooting for it.
On the date of publication, Patrick Sanders 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 InvestorPlace.com Publishing Guidelines.
Patrick Sanders is a freelance writer and editor in Maryland, and from 2015 to 2019 was head of the investment advice section at U.S. News & World Report. Follow him on Twitter at @1patricksanders.
