Is the CEO of app-based bank SoFi Technologies (NASDAQ:SOFI) panic-selling while some traders fret over a potential collapse of the banking system? Not at all. In actuality, a Securities and Exchange Commission (SEC) filing indicates that the company’s chief executive is buying more SOFI stock.
In case you didn’t get the memo, Wall Street is in an uproar over the collapse and possible rescue of SVB Financial (NASDAQ:SIVB). Its subsidiary, Silicon Valley Bank, is currently under the control of the Federal Deposit Insurance Corporation (FDIC) and is up for auction. And SIVB stock hasn’t been tradable on the stock market since Friday.
Some anxious financial traders might worry about contagion risk due to the Silicon Valley Bank’s implosion. One person who doesn’t seem to be very worried, however, is SoFi CEO Anthony Noto. On Friday, the chief executive purchased around $995,000 worth of SOFI stock.
To be more precise, Noto bought 180,000 SoFi shares and paid an average of $5.5283 per share. So, how is the market reacting to all of this head-spinning news?
What’s Happening With SOFI Stock?
SOFI stock was down between 3% and 4% at 10:00 a.m. Eastern today, so it looks like Noto is buying while other investors are selling. This begs the question, then, of why Noto would boldly choose to double down on his company’s shares.
Perhaps, it’s because SoFi isn’t overly exposed to bond-market risk like Silicon Valley Bank was. Bear in mind, government bond prices cratered as their yields increased over the past year. This put a great deal of pressure on Silicon Valley Bank’s bond-heavy balance sheet.
Unlike Silicon Valley Bank, SoFi wasn’t a large-scale owner of government bonds. Plus, SoFi assures it “does not hold assets with Silicon Valley Bank.”
VerityData research director Ben Silverman seems to suggest that Noto is sending a message to investors with his share purchase. “We think he’s trying to signal to investors that contagion impacting names like SoFi is creating a buying opportunity,” Silverman stated.
Maybe that’s true, but it’s also possible that Noto simply expects SOFI stock to recover soon. Either way, it will be interesting to find out whether the CEO eventually prevails with his large-scale wager on SoFi.
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.
