SoFi (NASDAQ:SOFI) stock doesn’t always mirror the good story that its fundamentals tell. But in the long run, SOFI stock is definitely one to own.
Financial tech (fintech) is a hot topic going forward. The world has been pursuing digitization of the field for eons. The 2020 global pandemic lockdown put that process into top gear. Crypto coins also are contributing to the propagation of fintech.
The more crypto coins we get, the more likely we will have programs exist to serve them. Eventually this brings about new fintech for future day-to-day transactions. It is already much faster and cheaper to move money around.
This is not a fad like many top level experts believe. Even when Bitcoin (CCC:BTC-USD) is at all time highs and $64,000 each, the skeptics ignore the evidence. There is no doubt that our future will hold fewer cash transactions. Therefore, SoFi is in the right place at the right time.
SoFi Is in Good Company
These newcomers are in good company with the likes of Square (NYSE:SQ), PayPal (NASDAQ:PYPL) and even older dinosaurs. Visa (NYSE:V) and MasterCard (NYSE:MA) are playing catch-up, but the whole cohort is taking fintech to the next level. SoFi also has a closer relationship with the consumer. They continue to seek new partnerships and alliances to extend that reach.
If I were to summarize today’s note, I would say that SoFi is part of the fintech posse. As such, they have a bright future ahead. Even the old transactor companies are having a hard time keeping up.
What started out as a student venture at Stanford University is now a successful financial public company. From a small loan at the school came this consumer lending opportunity. They have their finger in all that is personal finance, with a mobile base. They were early visionaries to what is fast becoming the norm.
Coming out of the summer, the stock collapsed 45%. That was an opportunity to engage long, because we had a precedent for it. SOFI stock fell 50% last March, then almost doubled. Buying the dip continues to work, because it is at +55% since the August lows. It took its time, as it spent the better part of three months basing for it. Finally in September the bulls broke out and punched through the resistance.
SOFI Stock Needs a Temporary Breather
After the fact, it becomes difficult to go all in with a fresh batch of longs from $20 per share. This is where the resistance levels intensify from the summer price action. The easier rebound has already happened to get here. This doesn’t mean that the rally has ended, it simply could use a rest. Chasing after that big a rally usually brings opportunity for disappointment.
Long term, I am confident that if the stock markets are higher, SOFI stock is also doing well. Shorter term, however, I would buy the dip closer to $18 per share. Anywhere there or lower would make for a much better mid-term starting point.
Regardless of timing, this is not a time to be overly confident with one’s assumptions. I forcibly penalize myself and only take partial positions. The markets are still at all-time highs, so there’s plenty of room for corrections.
We don’t have any imminent threats but investor sentiment has been fickle. They are quick to change their minds on Wall Street and all they need to do that is rhetoric. Investors who know options, can build a buffer by selling puts below current levels to own shares.
On the date of publication, Nicolas Chahine 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.
Nicolas Chahine is the managing director of SellSpreads.com.