News that President Biden will end the student loan repayment moratorium at the end of the year and cancel at least $10,000 in debt for most borrowers led an analyst to pound the table for SoFi Technologies (NASDAQ:SOFI). Dan Dolev of Mizuho called SOFI stock a buy because it was launched to refinance student loans and the announcement “removes an overhang.”
SoFi rose 5% on Aug. 24 and almost 4% more overnight. It opened today at about $6.70 per share. The market cap is about $5.2 billion.
The SoFi Story
SoFi has been a darling of analysts since it went public on June 1, 2021, through a Special Purpose Acquisition Company (SPAC). Since then the stock is down 69%.
Analysts talked about the promise of online banking and its marketing that included naming rights of the stadium that hosted the 2022 Super Bowl. They also discussed CEO Anthony Noto, once CFO of Twitter (NASDAQ:TWTR) and, before that, the National Football League. I was one of those analysts, and I even bought some of the stock for my retirement account. That investment is down about 50%.
SoFi now offers banking software after buying Technisys for $1.1 billion. It also offers application programming interfaces, or APIs, for online banking from its Galileo unit. The company offers stock trading, exchange-traded funds (ETFs) and even crypto.
Investors, however, mainly treat SoFi as a bank stock. In its second-quarter report, 41% of its net revenue was from interest. That was more than offset by its technology and marketing expenses. Its loss came to $98 million, or 12 cents per share, on revenue of $362.5 million.
What Happens Now for SOFI Stock?
SoFi is still seen as a moderate buy at Tipranks, with five of eight analysts telling investors to buy it. The average price target is $9.31. If a few more analysts pound the table for SoFi, it may get there — but it has a long way to go to make up for losses early investors experienced.
On the date of publication, Dana Blankenhorn held a long position in SOFI. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
