SoFi Stock More Than Reflects Negative Sentiments at Current Multiples

SOFI stock - SoFi Stock More Than Reflects Negative Sentiments at Current Multiples

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SoFi Technologies (NASDAQ:SOFI) stock is down 55.37% in the year thus far, making it one of the many tech stocks that have lost considerable steam due to economic headwinds. However, after the company has lost so much value, there are reasons to believe it’s a deep value play.

SoFi Technologies is a company that uses AI to help people with personal finance. It uses machine learning and natural language processing to understand the financial situation of the users.

SoFi has been gaining popularity in recent years, as more and more people are turning towards technology for financial assistance. Mike Cagney founded the company to create a fulfilling experience for customers; he saw the need to offer AI-based solutions.

However, due to the larger issues in the lending space, SOFI stock is under pressure. The Biden administration again decided to extend the pause on student loan payments. One of the biggest sources of revenue for SoFi is generated through refinancing educational debt.

In response, SoFi has revised its outlook downwards. The company expects adjusted net revenue to come towards $1.47 billion, down from the earlier outlook of $1.57 billion. Adjusted earnings before interest, taxes, depreciation, and amortization   (EBITDA) is now slated to top $100 million, versus the earlier forecast of $180 million.

Therefore, this news was another reason to stay away from SOFI stock. However, considering the valuation of SOFI stock, there is reason to purchase at these levels.

Is SOFI Stock a Buy?

SOFI stock has been falling steadily since November last year, leaving many of its excited investors who saw their assessment as a safe bet with their dreams crushed in the process. Sentiment across multiple industries is dipping, and rising interest rates are beginning to weigh down the overall environment. The latest news added to the woes, leading to renewed fears regarding its future.

Despite the gloomy markets, SoFi has continued to invest and become a major player in the fintech industry. Anthony Noto, CEO of SoFi, sees possibilities for the fintech company to operate in the financial technology space similar to how Amazon Web Services (AWS) operates in other markets. They want to be a key player first and then take up as much market share as possible.

I have talked about the bank charter approval and how that will help the company move forward. However, it’s important to reiterate that it will go a long way in ensuring that its revenues are diversified. Eventually, the company plans on further developing its banking-as-a-service (BaaS) platform to take on some of the traditional banking industry’s core features. The bank charter will help immensely in this regard.

The company is making headway into the future with several steps to help it succeed. The market selloff means many gems are trading at enviable discounts. At the current price, SOFI stock reflects the negative sentiment, and therefore, it’s a deep value play for the aggressive investor.

On the publication date, Faizan Farooque 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.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.


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