Sofi Stock Forecast 2023: Will SOFI Stock Recover?

Sofi Stock Forecast 2023: Will SOFI Stock Recover?

Sofi Stock Forecast 2023: SOFI is technically bullish. The SOFI Stock Prediction for the next 12 months is lowered to $6.1.

Will SOFI Stock Recover? Read on for More Information


Latest SOFI Stock Price

It is a well-known fact that technology stocks have taken it on the chin over the past year. For example, Nasdaq 100, dominated heavily by technology stocks has fallen 33% in the past year. Still, technology stock is a huge spectrum and fintech is also one prominent emerging part of this league.

The story of fintech stocks is no different from technology stocks, maybe they might hit even harder. For example, Upstart stock has crashed 94% in the last year and has proved to be a disaster for investors. Similarly, SoFi Technologies Inc stock has given a negative 77% return in the same period.

For 2023, we need to have a fresh look at fintech stocks as the macroeconomic environment is on the verge of a major shift. In this article, we will discuss the bull and bear case of SOFI stock keeping 2023 in perspective.

SOFI Stock Performance

  • 1 M: +32.3%
  • 6 M: -5.5%
  • 1 Y: -47.7%

Sofi Stock Forecast 2023: Analyst Price Target for next 12 months

Overall Average$6.1
JP Morgan$6
Piper Sandler$7.5
Morgan Stanley$5
Wedbush$6
Mizuho$6

Sofi Stock Price Prediction for the next 4 years

Sofi Stock Price Prediction 2023 is $14.1

Sofi Stock Price Prediction 2024 is $20.3

Sofi Stock Price Prediction 2025 is $26.4

Sofi Stock Price Prediction 2026 is $28.2

SOFI Stock Technical Analysis

A year back, that is in January 2022, SOFI’s stock price was over $16. However, with the market condition deteriorating, the SOFI stock price started to fall. By May 2022, SOFI was trading at around $5 and by the mid of October 2022, SOFI was below $5.

Currently, SOFI is trading around 60% below its 52-week high price which was $14.98. The 52-week low price for SOFI stock is $4.24.

SOFI Stock price has been on the rise in 2023. From being below $5, SOFI is now close to $6. For most of the days of 2023, SOFI has closed higher. The below chart shows the performance of SOFI stock in January 2023:

image 603

Performance on the Last Trading Day

  • Open Price: $5.94
  • Close Price: $6.68
  • Gain/Loss: +12.46%
  • Overall Market Cap: $5,418,440,070

Understanding SOFI Stock Forecast Using Technical Indicators

image 645

SOFI is technically bullish. The net SOFI stock price is above the 50-day and the 200-day Moving averages. The first support level for SOFI is $5.53 while the resistance is $7.45.

SOFI price surge has been backed by the huge buyers’ concentration. The buyers have outnumbered the sellers and which has directly led to the surge in the SOFI stock price.

On the above 4-hour timeframe chart, SOFI is trading within the bullish channel. The 50-day MA is likely to form a Golden Cross with the 200-day MA which will likely trigger the massive bullish run.

For the next trading day, SOFI is likely to trade in the range of $5.50 and $7.50.

The RSI for SOFI is within the over brought territory. The bulls are in control and the bears have been unable to short the stock.

image 646

The Stochastic RSI is throwing a bullish signal. The 14-day Stoch RSI is now above the 14-day MA which is a Buy signal. It is within the over-purchased territory now.

On the MACD chart, the MACD series proper is within the bullish zone. The fast line (blue) is once again testing the 9-day EMA and it is likely to break above it. However, the trading volume for SOFI has fallen. It is a highly bullish signal.

Indicators:

  • Moving Average: Buy
  • RSI: Buy
  • MACD: Buy
  • Stochastic RSI: Bullish

SOFI Stock Forecast Today

Overall OutlookNeutral
1. Market's WisdomNeutral
1a. Market DataNeutral
1b. Technical RecommendationNeutral
2. Crowd's WisdomNeutral
2a. Social Media BuzzSteady
2b. Social Media SentimentNeutral

Will SOFI Stock Recover?

Sofi Technologies is an online bank and financial service provider. In 2022, the stocks of SOFI got hammered massively and it closed 2022 over 60% below its January 1st, 2022 opening price.

The main reason behind Sofi stocks incurring such a massive loss was large exposure to student loans; uncertainty around the future of student loan debt and the extended moratorium on loan payments. Added to it, SOFI’s portfolio comprises a huge loss incurred from the personal loan.

There with no proper roadmap for loan recovery and the fear of a possible recession, SOFI stock is likely to trade lower. For a possible change in the fortunes of Sofi technology, it will have to diversify its portfolio.

Sofi Stock Forecast 2023: Bull Case

  • Bank Charter is the new ray of hope- Sofi finally managed to get a bank charter after a lengthy process that allows Sofi to gather and hold deposits and then use them to fund the loans. It also makes way for loan origination in-house which will save money and time for its customers.

It was the first quarter of Sofi bank and it contributed $2.7 billion in deposits. Now management has to decide what is the way forward for these deposits and loans originated.

What it does is that it gives much more flexibility to the management to extend their loan originations. As a result, their revenue is growing more than 50% in recent quarters. In Q3 FY 2022-23, results for which were announced on October 27th, revenue shot up 56% to $419 million YoY. It was Sofi’s first quarter of positive GAAP net income of $25 million. Lending adjusted net revenue grew 46% to $251 million in Q3.

This quite positive set of results coincided with the bank charter being functional giving Sofi that extra edge over its peers like Upstart Holdings Inc. Therefore, the Bank charter can lead to a high magnitude of revenue and customer count growth in 2023 which will be very positive for SOFI stock.

  • Results Speak better than words – A decade earlier, Sofi was only a student loan refinancing company that has gradually diversified its business and lending products. As a result, Sofi has not only seen growth in revenue but also growth in the number of new members being added to its platform.
Sofi Stock Forecast 2023

*Source: Investor’s presentation: Q3 FY 2022-23 Results

The image above shows the growth of new members on the Sofi platform. This is more important because Sofi was hit very hard by the Covid pandemic.

Sofi Stock Forecast 2023

*Source: Investor’s presentation: Q3 FY 2022-23 Results

The number of new products added is increasing every quarter and that is attracting new members. This growth may deaccelerate, but it is still much higher than its peers and that makes Sofi a leader in its niche.

  • No further extension of student loan moratorium– Since the Covid pandemic, the Biden administration has given an extension to student loans on more than seven occasions. It has also forgiven $10,000 debt to borrowers that make less than $125,000 per year. These decisions have largely affected Sofi negatively.

However, the positive news is that the extension period is now ending in December 2022, with very less chance of further extension. So, beginning in 2023, student loan refinancing revenue can be back on Sofi’s balance sheet and it can be a major boost for the company heading into 2023.

Also Read: Sofi Stock Forecast 2022

Sofi Stock Forecast 2023: Bear Case

  • Lack of Transparency with the future of loans- Bank charter is positive news for Sofi, but the management is very opaque regarding the strategy for the bank charter. It said that it plans to hold loans for six months, collect the recurring interest incomes and then sell the loans to investors.

This little tweak in the accounting rule enables Sofi to hold a very less amount as a provision for credit losses. For example, at the end of the third quarter, Sofi had $11.2 billion of loans on its balance sheet, whereas the provision amount is only $39.4 million, or 0.35% roughly as against 5-6% in normal bank practices. Therefore, Sofi is reaping the benefits of a bank, but not complying with the liabilities of the same.

Going into 2023, Fed may instruct Sofi to maintain proper credit provisions and that can significantly reduce the profitability of the company. On the contrary, if the US is heading into recession, investors may lose the appetite to absorb these loans and Sofi may be forced to show them permanently on its balance sheet.

  • Exceptional growth in personal loans, but that comes with inherent risk-  Although, Sofi loan originations is increasing in recent quarters, its negative point is that it is witnessing exceptional growth in personal loans which has more probability of defaulting compared with student loans or housing loans.

Sofi, although serves a very high-quality customer base and its loan portfolio, has a weighted FICO score of 748, but demand for a personal loan is depleting as reported by its peer LendingClub in the recent quarter.

Going into 2023, house loan originations will still be dull due to very high-interest rates and Sofi will get into trouble if personal loans are not sold to investors as expected.

Sofi Stock Forecast 2023: Is it a Buy for 2023?

In conclusion, 2022 has not been the year for Sofi and its stock price has fallen 67% since the start of 2022. Although the bank charter has provided an edge to Sofi, management does not have a clear strategy for it going into 2023.

No doubt that Sofi did trade at very premium valuations in the past. Still, the recent fall has cooled the valuations for SOFI. Now it trades at 3.25 times sales which is much lower than 14.45 in Q2 2021.

However, it is to be remembered that earnings per stock for Sofi is still negative despite increasing revenue in every quarter. Therefore, 2023 can be the turning point in the history of Sofi and net earnings can come into positive territory for the first time.

If an investor has some risk appetite, SOFI must be in his portfolio for 2023 to witness the awesome growth story for this fintech stock.

Note: Crowdwisdom360 collates Predictions and data from all over the net and has no in-house view on the likely trends in the Stocks or Crypto Coins. Please consult a registered investment advisor to guide you on your financial decisions.

Vineet Agarwal 

Vineet

Vineet

Vineet Agarwal is a trained technical analyst and avid stock trader. A graduate from a Top Technology Institute, Vineet carries out extensive technical and secondary research for this authored stock forecasts.

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