Headquartered in San Francisco, California, neo-banking leader SoFi Technologies (NASDAQ:SOFI) is a friend to savers and an enemy to traditional financial institutions. If you’re on board with a veritable revolution in banking, then SOFI stock should be right up your alley.
However, as we’ll discuss in a moment, the stock is fraught with volatility. You have to ask yourself: am I truly prepared to ride this roller coaster?
This is how it goes with disruptive technology. Early SOFI stock investors could be in for a wild ride — but as they say, nothing ventured, nothing gained.
There is a lot to cover here, including some good-news, bad-news financial results, a potentially game-changing acquisition and an intriguing new revenue source. Before we dig into all of that, though, let’s warm up with a little bit of technical analysis.
A Closer Look at SOFI Stock
If you’re a momentum-focused trader, then you’re probably not going to like this. In June and then again in November of 2021, SOFI stock hit its head on $24 and then pulled back sharply. That is what you might call a hard resistance level. It suggests that there are short sellers and profit takers waiting at $24.
After the most recent rejection at $24, SOFI stock slid quickly, even falling below $10 in early March of 2022. The buyers will definitely want to reclaim $10 and keep the stock above that level, as it holds psychological significance.
The momentum is clearly to the downside, but value hunters might consider this a buying opportunity. Still, whatever you do, don’t forget to keep an eye on that stubborn $24 level and maybe consider taking some profits there.
Marching Forward in March
March 2022 isn’t finished yet, but SoFi has already issued at least two highly positive press releases.
First of all, SoFi completed its acquisition of cloud-focused digital banking platform Technisys.
If SoFi is seeking to become a one-stop-shop financial-services platform, this is a great way to achieve that goal. By combining Technisys’ tech tools with SoFi’s Galileo platform, SoFi “will uniquely support multiple products – including checking, savings, deposits, lending and credit cards,” as well as future products.
Also in March, SoFi released its fourth-quarter (Q4) 2021 financial results. These results weren’t perfect, but there were definitely some bright spots.
The Q4 highlights included a 67% year-over-year total net revenue increase (GAAP) and a 54% year-over-year improvement in adjusted net revenue (non-GAAP). Plus, SoFi recorded a 39% quarter-over-quarter increase in new member adds in Q4 2021, as well as a 51% quarter-over-quarter improvement in new product adds.
The bad news is that SoFi’s fourth-quarter net earnings loss widened by 34% year-over-year to roughly $111 million. Hopefully, the company will work toward profitability in the coming quarters.
An Option or Two for New Revenue
As you may know by now, 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. This, of course, is huge news for SoFi and its stakeholders. With the banking charter approval, SoFi can offer more financial products and services to its customers.
Here is something that you might not have expected to happen, though. Chief Financial Officer Chris Lapointe stated during SoFi’s fourth-quarter 2021 conference call, “[more] recently, we launched margin and soon-to-be options.”
Lapointe didn’t provide much detail regarding these launches. However, the revenue-generation potential here must not be underestimated. Option brokers can get compensated through the “payment for order flow” system, which is somewhat controversial, but could be quite lucrative.
And, if you’ve ever short-sold a stock, you’ll probably know that brokers typically charge interest for as long as a customer is borrowing shares. Moreover, the interest rate for borrowing stock shares can be rather high in some instances.
The Bottom Line on SOFI Stock
Clearly, there is a lot going on with SoFi lately. It is not all good news, admittedly, as the company isn’t currently profitable.
Therefore, you won’t want to take a gigantic position in the stock. Furthermore, don’t get involved if you’re averse to volatility.
With all of that in mind, though, it is not a terrible idea to give SOFI stock a try with a small position. In the long run, you might profit handsomely from the neo-banking revolution that is already in progress.
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.
