SoFi (NASDAQ:SOFI) stock rose 4% on Jan. 9, with hopes rising that the “fintech winter” may be ending.
The online banking and brokerage company lost nearly two-thirds of its value in the last year as investors soured on the sector. However, the company is due to report results for 2022 on Jan. 30, and all eyes are on SOFI stock ahead of that date.
Since its last report on Nov. 1, when it guided toward higher revenue and said it had positive EBITDA, the stock is down 15%.
SOFI Stock: Fintech Bellwether
SoFi came public on June 1, 2021, through a special purpose acquisition company (SPAC). It has a high public profile thanks to a naming rights deal for the Los Angeles stadium that hosted last year’s Super Bowl and this week’s College Football Playoff Final. On its first day of trading, it closed at about $22.50 per share. It opened on Jan. 10 at about $4.80.
SoFi CEO Anthony Noto is a former managing director at Goldman Sachs (NYSE:GS) and was once chief financial officer for the National Football League.
At its initial public offering (IPO), SoFi had all the makings of a fintech giant. This was thanks largely to the acquisition of Galileo, a company that lets banks and brokers go online through an application program interface (API). Since then, SoFi has bought a small California bank, allowing it to take deposits from consumers. The company also lets customers buy cryptocurrency.
While I have called SoFi a long-term play, I have written positively about the stock, even investing some of my retirement money in it. So far, this has been a mistake.
The problem for fintechs like SoFi is that they get most of their capital through stock sales. While SoFi Bank now takes deposits and can hold loans, with 377,000 new clients in the third quarter alone, that’s still a small part of the business.
What Happens Next?
Analysts continue to expect growth but no profits from SoFi, a loss of about 8 cents per share and revenue of $453 million. Until the investment climate changes, it is unlikely to trade much higher.
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.
