There’s no denying that neo-banking firm SoFi Technologies (NASDAQ:SOFI) is divisive. After all, this is a company that wants to disrupt personal finance as we know it. However, this doesn’t mean SOFI stock can’t move higher. If the Federal Reserve eases up on its course of interest rate hikes, and if SoFi Technologies can continue to improve its financials, then investors should enjoy strong returns in 2023.
InvestorPlace contributor Luke Lango recently called SoFi the “Amazon of Finance” and described the up-and-coming fintech company’s growth trends as “exceptional.” I tend to concur with this assessment, though many investors have dumped their SoFi shares this year.
A turnaround could be underway, however. We’ll never get everyone to agree on SoFi Technologies, but that’s fine. Investors can still take a confident position in this audacious but fast-growing company.
SOFI Stock Is ‘Polarizing,’ But Also Cheap
Different commentators use different words to describe SOFI stock. Lango called it “dramatically undervalued,” for example, and he cited the end of the student loan moratorium as a positive catalyst for the company.
On the other hand, Keefe, Bruyette & Woods analyst Michael Perito called the stock “polarizing” — and he’s not necessarily wrong about that. SoFi Technologies is a neo-bank that breaks with tradition and threatens old-school financial institutions, so opinions will vary.
Still, the beatdown of SOFI stock in 2022 seems excessive. It started the year at $15 and has a 52-week high of $24.12. The room for upside here is substantial.
Besides, with inflation easing, the Fed now has an excuse to stop hiking interest rates so aggressively. If the central bank returns to easy-money policy, borrowing and lending activity should pick up, and this would certainly benefit SoFi Technologies.
SoFi Technologies Grew Its Membership Dramatically
SoFi Technologies CEO Anthony Noto describes his company as a “one-stop shop for financial services products” that provides “the ability to borrow, save, spend, invest and protect.” Again, SoFi is a company that threatens conventional banks — but is that a good business model?
Perito can call SOFI stock “polarizing” if he wants to, but he can’t dispute the data. During 2022’s third quarter, SoFi Technologies grew its total membership 61% year over year (YOY) to over 4.7 million.
Not only that, but the company increased its adjusted net revenue 51% YOY to $419 million. Plus, SoFi expanded its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) by a whopping 332% YOY to $44 million.
“Strength across all three of our business segments — Lending, Technology Platform and Financial Services” drove the company’s outstanding quarterly results, according to Noto. All in all, SoFi Technologies knocked it out of the park during a challenging time for fintech businesses.
SOFI Stock Is Absolutely a Buy
There’s no guarantee that the Fed will ease up on its path of aggressive interest rate raises. However, inflation seems to be cooling down. This could provide a setup for a more accommodative Fed, which would benefit SoFi Technologies’ business.
Meanwhile, SoFi’s membership and revenue are growing rapidly. So, don’t worry too much about whether SOFI stock is polarizing or not. It’s still a strong buy in my book, with the potential to recover its 52-week high in the coming months.
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.
