Could SoFi Stock Change Course in Q4?

SoFi (NASDAQ:SOFI) received its long-awaited bank charter last month, which is not only a significant milestone for the company, but also a solid positive catalyst. 

However, it has failed to lift SoFi’s stock price higher. Concerns over credit risk, regulatory uncertainty, and competitive activity have led to a significant sell-off in fintech stocks, including SoFi, noted John Hecht of Jefferies.

It’s worth noting that SoFi stock has declined by 46.1% in the past three months. Further, it has lost about 28% this year. 

Now What?

Though the market’s response to the approval of SoFi’s bank charter was lukewarm, it remains a strong growth catalyst. Notably, the banking license will help SoFi reduce its cost of capital and boost its bottom line. 

Hecht sees the approval of the bank charter as “a clear catalyst and demonstrates the confidence of the OCC and Federal Reserve in SoFi’s lending model.” 

Heading into Q4, the analyst is interested in management’s commentary around the “recognition of cost-of-capital benefits and how the company intends to grow and strategically operate the bank.”

Hecht has a Buy rating on SoFi stock due to the “diversity of its business, which allows for profitable cross-selling and revenue expansion.” However, he lowered the price target of SoFi stock, citing sector-wide valuation multiple compression.  

Along with Hecht, Bank of America Securities analyst Mihir Bhatia is also bullish on SoFi stock. Bhatia initiated coverage on SoFi stock with a Buy rating and price target of $17 (49.3% upside potential). The analyst expects SoFi’s revenues to increase rapidly due to a strong member growth rate. 

It’s worth noting that SoFi continues to acquire new members, with its members base increasing at a breakneck pace. 

Who’s Buying the Dip?

The sell-off in SoFi stock has eroded a considerable portion of its value. However, corporate insiders and investors holding portfolios on TipRanks are buying this dip in the share price. 

Per TipRanks’ Insider Trading Activity tool, corporate insiders added $1.5B worth of SoFi stock in the last three months. Meanwhile, 5.8% of these investors increased their exposure to SoFi stock in the last 30 days.

Wall Street’s Take

SoFi stock sports a Moderate Buy consensus rating on TipRanks based on 8 Buy and 3 Hold recommendations. 

Meanwhile, SoFi’s stock forecast on TipRanks shows significant upside potential due to the recent pullback. The average SoFi Technologies price target of $18.86 implies 65.6% upside potential to current levels. 

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