Many investors are eager to find the best National Football League (NFL) stock to buy ahead of the 2022 season kickoff. SoFi Technologies (SOFI) stock is worth considering for investors looking for exposure to the NFL economy. The company stands to benefit from the massive marketing exposure that the NFL brings.
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Founded in 2011 and based in California, SoFi is an online financial services provider. Its services include student loans, auto loans, home loans, and refinancing. It also provides saving, investing, and spending services.
How to Invest in NFL Stocks
The NFL comprises 32 teams. The 2022 NFL season kicks off on September 8. The games are sure to draw many fans. The NFL features among the professional sports leagues with the largest and most devoted fan communities. Therefore, a massive economy has developed around the professional football league.
The problem is that you can’t invest directly in the NFL because it is a private organization that does not have a publicly traded stock. The best way to get exposure to the NFL economy is through stocks of companies that benefit from the league. These could be companies that do business with the NFL itself or teams in the league. There are also companies that benefit from the marketing exposure that NFL events bring.
Aside from SoFi, the other stocks with exposure to the NFL economy are Nike (NKE), Verizon (VZ), Dick’s Sporting Goods (DKS), and DraftKings (DKNG).
What does SoFi have to do with the NFL?
SoFi secured branding rights to put its name on a Los Angeles stadium complex that is home to two NFL teams. The SoFi Stadium, located in Hollywood Park, is the home field of the Los Angeles Rams and Los Angeles Chargers. Built at the cost of about $5 billion, the SoFi Stadium complex includes a hotel and retail and office spaces. The deal SoFi struck allows it to put its brand on the arena for 20 years. The arrangement includes a partnership with the Rams and Chargers.
The SoFi Stadium can currently host 70,000 people, though the capacity can be expanded to more than 100,000 people. The arena, billed as the most expensive NFL stadium, is expected to host the opening and closing ceremonies of the Olympic Games in 2028.
The NFL stadium naming deal gives SoFi significant brand recognition and is great for its marketing efforts. SoFi CEO Anthony Noto said that the arrangement would drive awareness and trust in the SoFi brand. The executive further explained that the deal would enable the company to reach its members where they are and help them get their money right.
Considering that the arena is home to two NFL teams, it gives SoFi double exposure during NFL events. SoFi CEO Noto definitely knows how powerful NFL marketing can be to its brand. He was the league’s chief financial officer for a few years.
Biden’s Student Loan Forgiveness – an Issue for SoFi
Providing student loans is a major business for SoFi. However, this business has taken a hit during the pandemic. The company reported that its student loan and home loan originations fell more than 50% in Q2 2022 from a year ago. It attributed the problem to the pause on federal student loan repayment, which has diminished student loan refinancing demand.
Investors have also wondered what might be next for SoFi after U.S. President Joe Biden decided to cancel student loans for some borrowers. Additionally, the president extended the student repayment pause until the end of 2022.
Investors may be concerned that the extension of the student loan repayment pause would continue to hurt SoFi’s business. That may be true because the company itself has shown that the pause has impacted demand for its student loans product. However, the president made it clear that the latest pause on federal student loan repayment would be the last. Therefore, SoFi should breathe some sigh of relief for its student loans business in 2023.
Another concern has been that Biden’s student loan forgiveness could hit demand for student loan refinancing. The president decided to cancel up to $10,000 in student debt for individuals earning less than $125,000. A small group of borrowers with earnings up to $125,000 may see up to $20,000 of their student debt forgiven.
The worry about Biden’s student debt forgiveness damaging SoFi goes away if you consider the company’s target customers. SoFi’s student loan borrowers have an average income of $170,000. Therefore, SoFi’s target borrowers would be mostly ineligible for Biden’s student loan forgiveness.
Even if SoFi’s members qualify for the government’s student debt forgiveness, they would still have substantial balances to require refinancing solutions. It happens that high-income households, which comprise a large part of SoFi’s target group, have significant student debt.
What is the Price Target for SoFi?
SOFI stock has declined more than 60% year-to-date. However, Wall Street remains bullish on the stock. According to TipRanks’ analyst rating consensus, SoFi Technologies stock is a Moderate Buy based on five Buys and four Holds. The average SOFI price target of $8 implies 35.1% upside potential.
SoFi scores a “Perfect 10” from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
Moreover, SOFI stock is a favorite NFL stock for both Wall Street elites. TipRanks’ Hedge Fund Trading Activity tool shows that confidence in SoFi is currently Very Positive. Some seven hedge funds increased their cumulative holdings in the stock by 15.3 million shares in the last quarter.
SoFi Technologies stock is also seeing favorable mentions across financial blogs. TipRanks data shows that financial blogger opinions are 75% Bullish on SOFI, compared to a sector average of 68%.
Closing Remarks
SoFi Technologies stands to reap big from the 2022 NFL season from a marketing perspective. At a time when the student loans issue has become a popular topic in public discourse, SoFi may seize the NFL publicity to present itself as the solution that those struggling with student loans require. Apart from giving you exposure to the NFL economy, SoFi stock also presents an opportunity to buy the dip.
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