From facilitating student loan repayments to offering crucial business services, SoFi Technologies (NASDAQ:SOFI) serves a broad range of clients. I’ve been optimistic about the company and SOFI stock for a while, but this may be a time to exercise caution. Or better yet, SoFi Technologies investors can employ a careful strategy, which I will explain today.
You’ve probably heard that SoFi Technologies can help individuals conquer their student debt burdens. That’s certainly true, and refinancing student loans is one way SoFi Technologies can generate revenue.
However, there’s a whole other side to SoFi Technologies that people sometimes don’t discuss or aren’t even aware of. So, let’s delve into the details of that, and later we’ll consider a smart way to invest in SOFI stock.
Galileo Gives SoFi Technologies a Competitive Edge
Sometimes, commentators solely focus on SoFi Technologies as an all-in-one personal finance app. Sure, the company caters to the needs of individuals, but there’s more to SoFi Technologies’ growth story than that.
A big part of SoFi Technologies’ business model is Galileo. To put it simply, Galileo is SoFi Technologies’ array of financial solutions for businesses.
SoFi Technologies just published a double-shot of press releases pertaining to Galileo. First, SoFi Technologies launched Galileo Corporate Credit, which can help businesses streamline the business-to-business (B2B) expense management process.
Galileo Corporate Credit solution introduces a “central account with a single credit limit,” which can be used by both fintechs and non-financial brands. This solution is designed to “facilitate a streamlined billing cycle and enable corporate-level repayments.”
Furthermore, SoFi Technologies now offers the Galileo Payment Risk Platform to the “entire financial services ecosystem.” This is a stand-alone fraud anticipation and risk mitigation solution for businesses.
David Feuer, chief product officer at Galileo, emphasized that the Galileo Payment Risk Platform can enhance the “availability of real-time fraud controls” for financial-services businesses.
A Make-or-Break Event Is Coming for SOFI Stock
I could keep talking about Galileo for a while. For example, I could mention that Galileo is working with Mastercard (NYSE:MA) to enable lenders to offer “buy now, pay later” (sometimes abbreviated as “BNPL”) services to small business clients.
For SOFI stock traders, however, I’m not suggesting “buy now, pay later.” Instead, I’m recommending “buy some now, then buy some later.”
Let me explain. With interest rates being so elevated lately, SoFi Technologies really needs to demonstrate its resilience to the shareholders. The company has a prime opportunity to do this on Oct. 30.
That’s when SoFi Technologies is set to release its third-quarter 2023 financial results. In a tense environment replete with interest-rate jitters, Oct. 30 could be a make-or-break day for SOFI stock.
Wall Street is bracing for SoFi Technologies to report an earnings loss of 8 cents per share in Q3. If SoFi Technologies beats this consensus forecast, the stock could shoot to the moon. Otherwise, it might be a start of a painful drawdown.
SOFI Stock: Don’t Predict, Just Scale In
I don’t recommend trying to predict whether SoFi Technologies will beat or miss the consensus third-quarter EPS forecast. Instead, if you believe in the growth story of SoFi Technologies and Galileo, here’s a strategy you can try.
A confident but prudent course of action would be to buy only a few shares of SOFI stock today. Then, wait until Oct. 30 to see how the market reacts to SoFi Technologies’ earnings results and forward guidance.
If SoFi Technologies’ results and outlook are positive and the market responds with a buying frenzy, you can add a few more shares to your position. However, if there’s bad news and an unfavorable response from the market, just sit tight and be glad that you didn’t over-invest.
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.
