If you truly believe in the “buy low, sell high” strategy, then you should definitely have neo-banking firm SoFi Technologies (NASDAQ:SOFI) on your radar. SOFI stock has declined in value all year long. At the same time, the company has demonstrated growth according to several important metrics. Plus, there are experts on Wall Street expecting SoFi Technologies shares to head higher, so it’s not a terrible idea to take a small-sized position now.
It’s not difficult to find excuses to give up on SoFi Technologies. For example, the government extended the federal student loan repayment requirement moratorium. That’s problematic for SoFi Technologies, which generates revenue from refinancing student loans.
Then there’s the possibility that the Federal Reserve will continue hiking bond yields aggressively in the wake of a hotter-than-anticipated November jobs report. You can let these headwinds discourage you from investing in SoFi Technologies. Or, you can just keep your position size to a modest $100 and let it ride — and there are actually convincing reasons to do so.
The Drawdown in SOFI Stock Looks Overdone
First of all, there’s a disconnect between SoFi Technologies’ growth as a company and the relentless beatdown in SOFI stock. It’s as if financial traders have completely ignored the company’s improvement in key areas.
In every quarter, starting from 2020’s third quarter, SoFi Technologies has grown its membership count by at least 60% year over year (YOY). The same can be said for SoFi’s total product count.
SoFi Technologies’ expansion in its financial services products has been particularly notable. During the company’s most recently reported quarter, SoFi grew its financial services products by 83% YOY.
Also during that quarter, SoFi Technologies improved its adjusted net revenue by 51%. Plus, the company’s adjusted EBITDA increased 332%. So, it seems irrational and excessive that SOFI stock has lost around 70% of its value this year.
Wall Street Envisions Upside for SoFi Technologies
Shares of SoFi Technologies traded at $4 and change recently, but some traders might fear further downside. However, there are analysts on Wall Street who actually expect the shares to gain value.
In fact, Mizuho analyst Dan Dolev issued a “buy” rating on SOFI stock not long ago. Granted, Dolev reduced his price target on the shares from $7 to $6. That reduced price objective still implies fairly significant upside, though.
Meanwhile, Wedbush analyst David Chiaverini reiterated an “outperform” rating, which is similar to a “buy” rating, on SoFi Technologies. Chiaverini cut his price target on the shares from $8 to $6 — but again, this suggests upside potential.
Based on an average of 10 analysts’ price targets, SOFI stock could reach $7.15 in the next 12 months. This doesn’t mean Wall Street is massively bullish on SoFi Technologies, but it should at least give the company’s investors a boost of confidence.
Take a Chance With a $100 Stake in SOFI Stock
From interest-rate hikes to the student loan repayment pause, financial traders can easily identify reasons to be worried about SoFi Technologies. Therefore, it’s sensible to keep your share position small.
On the other hand, SoFi Technologies is demonstrating growth and some analysts are predicting share-price appreciation. Hence, you can take a chance with a $100 stake in SOFI stock for a zero-or-hero bet on a fintech-market disruptor.
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.
