If you like to invest in future-forward, industry-disruptive businesses, then SoFi Technologies (NASDAQ:SOFI) stock should be right up your alley. As SoFi Technologies continues to threaten traditional, boring banks, investors should consider buying a few shares and holding them for years.
Granted, there are risks involved as government policy could cause problems for SoFi Technologies’ lending business. However, one expert on Wall Street sees SoFi Technologies as a high-potential technology company, and even considered a comparison between SoFi and the almighty Amazon (NASDAQ:AMZN).
Risks and Frustrations With SOFI Stock
Before delving into SoFi Technologies’ opportunities, we should first address the risks involved with SOFI stock. First, SoFi Technologies has a quarterly earnings report coming up this month. Consequently, risk-averse traders may choose to wait to see the quarterly results.
Furthermore, the Biden administration’s ongoing efforts to forgive/vacate federal student-loan debt might take a toll on SoFi Technologies’ lending business. Late last year, the Department of Education disclosed its plans to cancel nearly $5 billion in student-loan debt.
In the coming months, the Biden administration’s Saving on A Valuable Education plan will take effect. This plan will reportedly offer federal student-loan forgiveness to more borrowers.
Finally, I should include a technical note as SOFI stock has repeatedly hit its head on the $10 level and then fallen back down. That’s frustrating, but remember that resistance levels are meant to be broken. SoFi Technologies’ upcoming earnings report could provide a bullish catalyst to send the share price permanently above $10.
Could SoFi Technologies Be Like Amazon?
Investors shouldn’t ignore the government-policy threat to SoFi Technologies’ lending business. However, they should also remember SoFi generates significant revenue from other business endeavors. In particular, SoFi offers a range of non-lending financial/banking services, and the company also has a technology platform.
Truist analyst Andrew Jeffrey argued that SoFi Technologies’ “earnings quality” should improve as the company’s “mix shifts to non-Lending.” The point is, investors should be aware of the news headlines pertaining to student loans, but don’t need to worry excessively about how these news items will impact SoFi Technologies.
Also on that topic, Deutsche Bank analyst Mark DeVries emphasized SoFi Technologies’ potential as a technology company. DeVries even went so far as to consider a comparison between SoFi and Amazon Web Services (AWS).
“If SOFI is to become the ‘Amazon Web Services of banking services’, it will need to return to the strong growth in the Technology platform that it had until 2023,” DeVries stated. Moreover, Deutsche Bank analysts cited anticipated growth in technology sales as a possible driver of SOFI stock’s performance this year.
Interestingly, both Jeffrey and DeVries set share-price targets above $10 for SoFi Technologies. If SoFi focuses strongly on its technology platform, this could be a win-win for the company and its investors.
SOFI Stock: You’ll Wish You Had Bought This Below $10
It’s amazing to consider SoFi Technologies becoming the AWS of banking services. Yet, this isn’t an impossible dream for SoFi. The company has come a long way in recent years, and isn’t wholly dependent on its lending-services business.
So, don’t just think of SoFi Technologies as a lender or a bank. SoFi has the potential to be a financial-sector disruptor and a game-changing technology company. If you’re on board with this and understand the risks and frustrations involved, feel free to buy a few shares of SOFI stock.
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.
