San Francisco-based personal finance company SoFi Technologies (NASDAQ:SOFI) is surrounded by hype and a promise to make finance easier for one and all. However, the promise is sounding hollow as SOFI stock is on a downward spree, hitting new lows each week. Investors are losing patience and getting frustrated with the stock. Since the fundamentals do not translate into gains for the shareholders, they are losing interest and hope in SOFI stock.
The stock has declined 31% in a month and almost 10% in the past week. It is currently trading at $6.42 per share, closer to its all-time low of $6.23. There are two reasons behind this dip. One is the extension of the federal student loan payment moratorium and another is the company’s updated guidance to the downside.
SoFi has updated its guidance with an adjusted net revenue of $1.46 billion, down from the previous guidance of $1.57 billion. For the first quarter, it expects adjusted net revenue of $280 million. This guideline has pushed SOFI stock to new lows and I believe it will continue to dip this week. The company has a market capitalization of $5.18 billion, but the lack of profits seem disturbing. Despite the rise in users and the improvements in their product, the company has not been able to impress investors.
I believe SOFI stock will continue to fall in the near term due to the student loan moratorium, but it has the potential to rebound. However, do not expect the stock to rebound anytime soon. If the company is unable to meet the guideline in the quarterly results, the downward trend may extend further. However, the dip is a good chance to take a position in SOFI stock for its business model and the potential to expand in the coming years. The bank charter approval will also make the path clearer for SoFi in the long-term.
Top tech companies are reporting earnings this week and we may see their impact on SOFI stock.
On the date of publication, Vandita Jadeja 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.
