This Stock’s Dip is an Opportunity

Shares in San Francisco-based fintech SoFi Technologies (NASDAQ:SOFI) are in a slump. Again. After a rally that lasted from last August through Nov. 12, SOFI stock has been on a downward trajectory. Investors who bought shares after SOFI began publicly trading last June will be feeling like they are on a roller coaster.

SOFI stock has been listed for just seven months, but during that short time, it has surged twice. Each rally was followed by a collapse. After hitting $23.04 last June (shortly after SOFI was listed), shares dropped to just over $14 by August.

After its latest close of $13.74, SOFI is off its November 12, 2021 close by nearly 40%. The current dip is also its lowest yet.

This offers an opportunity to buy shares at a discount before they rally. But is that a wise move? It assumes they will rally.

SoFi Has Greatly Expanded its Market, Opening Up Big Potential

When Sofi first launched in 2011, its focus was simple: student loans. Aimed at college and university alumni, SoFi offered refinancing of student loans at lower than government rates. However, the company quickly set its sights on becoming much more.

In 2015, SoFi expanded into personal loans and mortgages. Two years later, it added wealth management, including investing. In 2018, it entered the crypto trading market. In 2019, it launched Sofi Money and SoFi Invest.

Since 2020, the company has continued to ramp up its ambitions. In April of that year, SoFi acquired banking and payment platform Galileo Financial for $1.2 billion. This gave SoFi serious B2B cred on top of its consumer financial services. It followed that up with the acquisition of Hong Kong-based 8 Securities, an international investment app.

In 2021, SoFi launched its first ever credit card.

Boosting its brand, the company bought the naming rights to a Los Angeles NFL football stadium. The most expensive NFL stadium ever built opened in 2020 as SoFi Stadium. It will be host to the 2022 Super Bowl. The deal was estimated to cost Sofi $625 million over the course of 20 years.

At this point, SoFi is no startup. It has grown from a consumer refinancing company to a full-service fintech and financial services company that is projecting full-year revenue of nearly $1 billion for 2021. SoFi customers can still refinance a student loan, but they can also use the company to secure a mortgage to buy a house, buy stocks, trade crypto currencies, get a credit card, buy life insurance, obtain financing for their small business and more.

The company has name brand recognition thanks to aggressive marketing, rapid expansion and having its name splashed across SoFi Stadium.

However, you couldn’t buy SOFI stock until June 1, 2021. That’s when SoFi went public as part of a special-purpose acquisition company (SPAC) merger with Social Capital Hedosophia Holdings Corp V.

Since then, SOFI stock has taken investors on a roller coaster ride with early investors cashing out, meme stock status coming into play, a secondary share offering and other factors all contributing.

The Bottom Line on SOFI Stock

At this point, SOFI stock earns a “B” rating in Portfolio Grader. The score is a strong indicator that this stock is positioned to deliver long-term growth. The investment analysts polled by CNN Business agree. They rate SOFI as a consensus “buy.” Their median 12-month price target of $24 offers a very tempting 75% upside. Even the lowest price target set by those analysts — $18 — offers more than 30% upside.

Mind you, that median price target of $24 is less than one dollar higher than SOFI stock’s June 18 close, and less than $1.50 off its Nov. 12 close. That suggests analysts are looking at those peak closes as being closer to where SOFI stock should be trading.

The current dip has SoFi shares priced at their lowest level since the company went public. The gut check here, though, is the likelihood that the turbulence of the past seven months may continue before SOFI stock finds its groove. There are also risk factors that are out of SoFi’s control. For example, InvestorPlace contributor Josh Enomoto points out the potential for rising interest rates that would raise the cost of borrowing.

In short, at its current price, SOFI stock would be a solid fintech pick for a long-term growth portfolio. However, turbulence before shares stabilize may be unnerving for faint-hearted investors.

— Louis Navellier and the InvestorPlace Research Staff

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Source: Investor Place