It has been a stock defined by unnecessary roughness. I’m talking about SoFi Technologies (NASDAQ:SOFI) and SOFI stock. But looking past the first quarter of play, can SOFI’s bulls gain back control of the game?
Let’s look at what the bears, bulls and the action on the SoFi Technologies price chart are saying, then offer a risk-adjusted determination aligned with those finding.
If misery loves company, there is plenty of that for SOFI stock investors to commensurate with this year.
From fintech peers Block (NYSE:SQ) or PayPal (NASDAQ:PYPL) to index investors in the blue-chip bellwethers, the market’s Roaring ‘20s bull cycle has been upended the past three months.
But the combination of the conflict in Eastern Europe, inflation and interest rate worries, Covid-19 and a prolonged risk-off trade for higher-multiple growth plays has been particularly tough on SOFI stock.
Shares are down almost 45% in 2022 and are just coming back from all-time-lows. And a large-cap valuation of $18 billion reached last November has been relegated into a second string mid-cap of about $7 billion.
So, what went wrong?
Bears on the Nine in SOFI Stock
There are the aforementioned broader market grizzly underpinnings which have helped get SOFI stock down to about $9 a share, or more aptly, the nine-year line in a game being won by the bears.
But there are other possible bearish misgivings with SoFi Technologies, as well.
Some bears, or less positive investors like hedge fund Baron FinTech Fund, which closed its SOFI stake in the fourth quarter of last year’s game, have been reacting to intensifying competition and rising customer acquisition costs for consumer-facing fintech firms.
Then there is Morgan Stanley (NYSE:MS). Just yesterday, the investment bank slashed its price target from $18 to $10 while downgrading shares from overweight to equal weight.
The outfit cited the likelihood of a prolonged extension for the federal student loan moratorium due to expire in May. If correct, the impact is negative for SoFi as it quashes a nearby catalyst for refinancing revenues.
The banker is also fretting a slow start to SOFI stock’s home lending business against a more challenging housing market.
Not everyone is bearish on SOFI stock, though.
First and Nine for the Bulls?
Seeking Alpha contributor Stone Fox Capital notes today’s prices in SOFI stock are totally unjustified with shares trading at just 5x its full-year sales while maintaining a 50% growth rate. Further, even if Morgan Stanley is proven more correct than not, SoFi’s robust digital-first ecosystem offers other growth drivers.
Bulls contend a new banking charter and SOFI stock’s differentiating payment processing and technology platform Galileo, which exploits other neobanks, are two significant catalysts for shares.
And as former hedge fund manager and CNBC personality James Cramer insisted earlier this week, SoFi’s Chief Executive Officer Anthony Noto is just the guy to get the job done.
SOFI Stock Bulls Take Control of the Game
The illustrated weekly view of SOFI stock shows two fumbles by bulls in recent weeks as they attempted to reverse SoFi’s bear market out of a couple double-bottom variations.
Maybe worse, the failures to reverse shares higher occurred despite the backing of a fairly attractive stochastics setup on both occasions.
Today, and after hitting an all-time-low of $7.74, shares are back near the nine-yard line, or $9 level, as bulls push the bears back from reaching the end zone.
The action looks promising. But for those upbeat on SoFi’s business prospects and possibly eyeing the chance to buy a growth narrative at a deep discount, a third confirmation could prove charming and worth waiting on.
Upon the weekly stochastics and candlestick, both signaling a reversal pattern, I’d also suggest suiting up with a SOFI stock married put or collar strategy to ensure a great offensive play comes equipped with an equally staunch defense.
On the date of publication, Chris Tyler holds long positions in SoFi Technologies (SOFI) (either directly or indirectly), but no other positions in securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
