It Will Take Months More to Understand SoFi

SOFI stock - It Will Take Months More to Understand SoFi

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Investors are seeking to better understand SoFi Technologies (NASDAQ:SOFI) stock in a tumultuous 2022. It has to be said, the company is dealing with a lot. Perhaps most prominently, the company finds itself front-and-center in the debates over the student loan moratorium and any loan forgiveness that occurs. On top of that, the firm has pivoted into banking and traditional finance with the approval of its bank charter. And on top of that, the company also announced that it had agreed to acquire cloud-native, iBanking company, Technisys

Essentially, investors find themselves trying to disentangle a variety of factors in order to come to a conclusive idea of where SOFI stock is headed. I think one thing to conclude is that the company is seeking a footing in terms of its business operations. What I mean is that the company’s pivot toward traditional banking operations is suggestive that its business mix has proven a bit too difficult. 

Here’s what I see happening. Investors won’t be able to do very much with the company’s first-quarter earnings. There are simply too many variables that are still going to be in play. It is going to take months for investors to have any semblance of a clear conception of the company. The market will move temporarily based on revenue numbers and loss numbers, true. However, it’s going to take months to understand how interest rate hikes and any student loan forgiveness will affect the company’s operations moving forward. 

That’s why I’d suggest sitting tight and not moving on SOFI stock regardless of what happens in the coming few weeks. The biggest banks with the best analysts are going to struggle to provide you with any actionable information over the next few weeks as it relates to SoFi Technologies. 

In short, this is one of those rare instances where the best course of action is inaction. If you believe that the stock will be stronger once there’s some clarity on student loans, you’ll probably have to wait for a few months anyway. Regardless of what President Joe Biden’s Administration does, there are likely to be subsequent court challenges. So there’s not going to be any clarity on that front for some time to come. SoFi Bank isn’t likely to contribute to the company in a fundamental meaningful way until some time in the second quarter. That’s what the company already noted in its Q4 earnings report. In short, there are just too many variables to understand at this point. Remain on the sidelines. 

On the date of publication, Alex Sirois 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.

Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks.Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.


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