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SoFi Technologies Looks Strong as the App Is Now Also a Bank

From the outset, neo-banking leader SoFi Technologies (NASDAQ:SOFI) sought to help people from all walks of life to manage their money. It’s an ambitious vision that some loyal SOFI stock holders undoubtedly share.

the Social Finance (SoFi stock) logo is displayed on a smartphone.

Source: rafapress / Shutterstock.com

The idea of taking on the big banks and handing the power back to the people is exciting. It is also exciting to invest in SoFi Technologies, but not everyone is prepared to ride this roller coaster.

Since SOFI stock just broke below a key support level, it might be a scary time for the investors. The stock’s price action is less than ideal and a turnaround needs to happen soon before the technical damage worsens.

On the other hand, there may be a bargain here as SoFi just released some potentially game-changing news. Without a doubt, taking on the banks isn’t easy — and if you can’t beat them, perhaps it’s just better to join them.

A Closer Look at SOFI Stock

Going back to the beginning, SOFI stock started trading on the Nasdaq on Jun. 1, 2021. It didn’t take long for a range to form, with crucial support and resistance levels to watch.

The support level of $14 has been firmly established as the stock bounced off of that price point in May and again in August. Meanwhile, the $24 resistance level was confirmed in February, June and November.

When it comes to these levels, the principle to remember is: they work until they don’t. As it turned out, the $14 support level stopped working in January 2022 when SOFI stock crashed to $12 and change.

The next battle zone could be $10, which has psychological significance as the buyers certainly don’t want the stock to get into the single digits.

There may be a terrific bargain here for long-term investors, though, as the company just issued a critical press release.

Becoming a Bank

For years, SoFi couldn’t call itself a bank. Probably a better descriptor would be “personal-finance app.”

It seems that SoFi really wanted to be an all-in-one solution for people’s financial needs. This presented a frustrating dilemma, as the company wanted to challenge the banking system, but was unable to do certain things without actually becoming a bank.

Sooner or later, SoFi was probably destined to join the ranks of banks. The company hinted at moving in that direction last year when it agreed to buy out a tiny California-based community bank. For months, investors had to wait and see if SoFi would actually get permission from the government to become a bona fide bank. At long last, the good news came out on Jan. 18, 2022.

According to the press release, the Office of the Comptroller of the Currency and the U.S. Federal Reserve approved SoFi’s application to operate a bank subsidiary, known as SoFi Bank.

What This Means

Now, you might be wondering why becoming a bank is such a big deal. If so, then SoFi Chief Executive Officer Anthony Noto is more than happy to provide an explanation.

In general terms, the bank charter will allow SoFi “to help even more people get their money right and realize their ambitions.” Yet, inquiring minds will want a more concrete answer than that. Specifically, as a bank, SoFi will “be able to lend at even more competitive interest rates and provide our members with high-yielding interest in checking and savings,” Noto notes.

Nowadays, the U.S. government pays rock-bottom bond yields. Therefore, SoFi may be able to entice more customers with high-yield checking and savings plans. Additionally, Noto asserts that SoFi “will also enhance our financial products and services to ensure they efficiently meet the needs of our members, business partners, and communities across the country.”

The Bottom Line on SOFI Stock

Hopefully, SoFi will release more details about how the company will better meet its customers’ and business partners’ needs.

Some folks might be disappointed that SoFi is becoming a bank. This is understandable if you viewed the company as an alternative to the banking system.

Still, SoFi might be able to broaden its service offerings as a bank. With that, the company’s shareholders might anticipate better returns, even if it takes a while.

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.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarketsFinom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets. 

Article printed from InvestorPlace Media, https://investorplace.com/2022/01/sofi-stock-looks-strong-as-sofi-is-now-both-an-app-and-a-bank/.

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