The SoFi CEO Just Bought a Chunk of SOFI Stock. Should You?
It’s no secret that investors of California-based neo-banking firm SoFi Technologies (NASDAQ:SOFI) have struggled in 2022. Yet, now is a time to hold SOFI stock, not dump it. If you need a real confidence-booster, check out the insider buying activity and you’ll be convinced to stay in the trade with SoFi Technologies.
Is it possible to buy when someone else is buying, though? Indeed it is, especially if the buyer is someone with intimate knowledge of the company.
Don’t get me wrong — insider transactions shouldn’t be the only reason to buy a stock. Nevertheless, it’s encouraging when a high-level executive puts his money where his mouth is. That, along with SoFi Technologies’ favorable reward-to-risk proposition, should convince contrarian investors to stay the course or even double down.
What’s Happening with SOFI Stock?
At the beginning of 2022, it was inconceivable that SOFI stock would fall below $5. However, this has actually happened as the share price looks like it could end the year in the $4 range.
Is this really SoFi Technologies’ fault, though? Even if the company has already made the right moves, such as securing a banking charter, external circumstances have shaken many investors out of the trade with SoFi Technologies.
For instance, President Joe Biden’s administration extended the pause on requiring repayment of federal student loans. That was a tough break for SoFi Technologies, which derives some of its revenue from student loan refinancing.
Then, of course, there were the aggressive interest rate hikes throughout much of 2022. It’s been challenging for financial businesses like SoFi Technologies to navigate a less accommodative monetary policy environment.
The SoFi Technologies CEO Is a Major Shareholder
It’s certainly possible that the aforementioned headwinds have already been priced into SoFi Technologies shares. Indeed, not everyone is bearish on SoFi, and a high-ranking executive is actually a big-time buyer.
Not long ago, Piper Sandler analysts gave SoFi Technologies a $7.50 price target and an “overweight” rating. Analyst Kevin Barker expects the fintech company to “outperform peers as it continues to grow EBITDA and make progress towards GAAP profitability by 4Q23.”
That’s heartening, and so is the news that SoFi Technologies CEO Anthony Noto purchased roughly 1.13 million shares of SOFI stock from Dec. 9 through Dec. 13. This happened through three purchases, each of which consisted of at least 132,600 shares.
Noto paid approximately $5 million to raise his stake in SoFi Technologies, so there’s no denying that he’s confident in his company. Is it possible that the chief executive knows something everyone else doesn’t? Or just maybe, he’s just willing to have some skin in the game as SoFi Technologies’ problems aren’t as bad as financial traders think they are.
What You Can Do Now
The pessimism surrounding SoFi Technologies has reached an extreme level. Value seekers should consider that the company’s troubles aren’t SoFi Technologies’ fault and have already been priced into the shares.
Besides, it’s nice to know that you’re investing along with an executive who truly believes in his company. So, don’t hesitate to purchase some shares of SOFI stock — maybe not as many shares as Noto bought — but still enough to participate in a potential rebound during the coming year.
On the date of publication, David Moadel 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.