It is early in 2022, so I thought I would go out on a limb by suggesting that SoFi Technologies (NASDAQ:SOFI) will double this year with SOFI stock hitting $30.
I said on several occasions in 2021 that I was out of the price prediction game. However, InvestorPlace contributor Muslim Farooque’s recent article suggesting that SoFi is one of the best cheap stocks (under $20) to buy in 2022, pushed me over the edge.
I can’t help myself. I have to lay it out there. Humble pie can wait.
As fintechs go, I really like SOFI stock. Here’s why.
SOFI Stock Doubles to $30
In my most recent December article about the company, I said that owning SOFI stock, like life itself, was meant to be endured. It was one of my dad’s stoic, stiff upper lip views about the world. I hated hearing that as a kid, but I fully comprehend what he meant many years later.
Sometimes you don’t get what you want when you want it.
For most of 2021, I was enthusiastic about the company’s deep push into banking and other financial services. Despite its free fall in the last two months of the year — on three occasions in 2021, SOFI stock traded above or near $24 — I’ve continued to speak highly of the company.
Here’s what I said about SoFi in December:
“As financial services stocks go, I can count the number of companies I would stand behind on two hands. Square is one, SVB Financial (NASDAQ:SIVB) is another. And despite losing a boatload of money, SoFi Technologies is a third.
“I liked SOFI stock at $18. Despite the naysayers, I like it even better at $14.”
As long as SoFi continues to add members — it almost doubled its membership year-over-year in the third quarter of 2021 to 2.9 million — and those members use more than one of its products, revenues and profits will take care of themselves.
Further, as long as the big banks continue to stack the deck in favor of the wealthiest customers while ignoring the 99%, businesses like SoFi will continue to take from the establishment.
Although it doesn’t make money at the moment, I believe the pathway to profitability is clear. So too, is a $30 stock price.
The Biggest Catalyst
As my colleague stated in his commentary, the company’s investors have a lot to look forward to in 2022. The most significant catalyst is the approval of its national bank charter, which should be expedited by its acquisition of Golden Pacific Bancorp (OTCMKTS:GPBI).
By obtaining a national bank charter, SoFi will be able to grow its lending business. It will significantly reduce its cost of borrowing by not having to rely on third-party capital and it will increase its profitability.
Its investor presentation states that a national bank charter will add an estimated $299 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by the year 2025. That’s a 25% bump. Even better, it estimates a 78% bump to adjusted EBITDA in 2022.
The nine analysts who cover its stock believe it will break even in 2023. The average target price is $24.25, with a high and low target price of $30 and $19, respectively.
The Bottom Line on SOFI Stock
Rosenblatt Securities analyst Sean Horgan recently lowered his 2022 revenue estimate by $40 million or 3% due to the three-month extension of the student loan moratorium. As a result, he cut his target price by $2 to $28. However, he still considers it a “high-conviction buy.”
So, it might not hit $30 in 2022, but at the very least, aggressive investors are likely to make money over the next year buying in the mid-teens, where it currently trades.
Long-term, like my colleague, I continue to view it as an excellent investment. That said, you can be sure it will be a volatile climb to $30 and beyond.
On the date of publication, Will Ashworth 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.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.