Financial technology (fintech) powerhouse and online bank SoFi Technologies (NASDAQ:SOFI) saw its value slip due to broader market weakness. However, over the long term, the company’s recently inked partnership with the National Basketball Association (NBA) and one of its league’s top stars may help move the needle over the long run. However, one of the counterarguments about SOFI stock is the lack of sustained upside.
Earlier Tuesday, an official press release announced that SoFi will become the official banking partner of the NBA. This deal also includes the league’s developmental programs, the NBA G League and NBA 2K League, as well as USA Basketball. Additionally, SoFi will be the official entitlement partner of the SoFi NBA Play-In Tournament.
Jayson Tatum — a five-time NBA All-Star — will also partner with the fintech giant to establish the SoFi Generational Wealth Fund. Here, SoFi will donate $1 million to promote financial literacy and foster family sustaining wealth for the long haul.
As for the tournament, it will take place on April 16 through April 19. With teams finishing the regular season with the seventh- to tenth-highest winning percentages in each conference competing for a spot in the playoffs, the matchups carry significance. By logical deduction, SoFi’s sponsorship commands the potential for increased brand awareness.
SOFI Stock Faces Shareholder Credibility Concerns
SoFi CEO Anthony Noto understandably expressed optimism about the NBA partnership. In particular, Noto emphasized the importance of working with Tatum, stating the need to close the need to close “the generational wealth gap in America, where nearly 60% don’t feel like they can become financially secure.” Fundamentally, the company’s targeting of prominent young athletes could lift SOFI stock.
In September 2022, the online bank announced a multi-year partnership with Los Angeles Chargers quarterback Justin Herbert. In the brand campaign and television spots, Herbert — a rising young star in the National Football League (NFL) — breaks up with bad banking and moves on with SoFi. It’s fun and quirky enough to resonate with the audience, implying much positivity for SOFI stock.
However, the fintech brand has failed to impress shareholders with its inability to sustain a rally. A recent example centers on the company’s fourth-quarter earnings report, which disclosed earnings per share of 2 cents. In contrast, Wall Street called for a breakeven print. That also happened to be SoFi’s first-ever quarterly profit. Nevertheless, SOFI stock quickly tumbled following an initial boost.
Moreover, last year’s rally in the closing weeks held much promise. However, an analyst downgrade due to a “premium” valuation and anticipated pressure from lower interest rates contributed to the upswing’s rapid erosion.
Why It Matters
Adding to the frustration for investors, analysts remain pensive about SOFI stock. According to TipRanks, the consensus view sits at hold. This assessment breaks down as four buys, eight holds and four sells. Overall, the average price target reaches $9.13, implying about 14% upside potential over the next 12 months.
On the date of publication, Josh Enomoto 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.
