Sofi Technologies SOFI Stock Forecast 2023

Sofi Technologies SOFI Stock Forecast 2023: SOFI is technically neutral. The SOFI Stock Prediction for the next 12 months is increased to $7.5.

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: -13.1%
  • 3 M: -15.2%
  • 1 Y: -28.3%

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

Overall Average$7.5
Morgan Stanley$6.5
Credit Suisse$7.5
Piper Sandler$7.5

Sofi Stock Price Prediction for the next 4 years

  • Sofi Stock Price Prediction 2023 is $12.4
  • Sofi Stock Price Prediction 2024 is $19.2
  • Sofi Stock Price Prediction 2025 is $25.3
  • Sofi Stock Price Prediction 2026 is $27.1

SOFI Stock Technical Analysis

Based on the long-term technical analysis, there is a neutral outlook for the stock, indicating a flat potential in the future. Additionally, the short-term period graph offers an enticing opportunity to buy the stock, even when examined over a one-day period. This reinforces the idea that the stock may be poised for an upward movement in the near future.

Analyzing the moving averages (MA), we find that MA 50 is at 5.55 and MA 200 is at 5.62. Both moving averages exhibit a slightly negative trend, reflecting the overall neutral sentiment surrounding the stock.

image 715

The momentum oscillators, including the relative strength index (RSI) and the ultimate oscillator, further support a favorable outlook for the stock. With an RSI of 51.971 and an ultimate oscillator reading of 54.087, these indicators indicate positive momentum and suggest that the stock is on an upward trajectory.

Furthermore, the MACD (12, 26) and Williams%R indicators present mixed opportunities to purchase the stock and are beneficial for identifying trends. These indicators reinforce the potential for a flat movement in the stock’s price.

Moreover, the high volatility index implies that the positive oscillations in the stock’s price may be sustained by a significant volume of trading activity. This suggests that the stock has the potential to experience substantial price fluctuations, which could prove advantageous for investors seeking to capitalize on short-term price movements.

In conclusion, the technical analysis of the stock points to a slightly bullish outlook in the long term, with favorable indications in the short term as well. The moving averages, momentum oscillators, and volatility index all support the potential for an upward movement in the stock’s price.

Recent Developments

Why Oppenheimer isn’t very concerned about valuation issues with SoFi Stock

Concerns have been raised about SoFi Technologies’ aggressive accounting approach, which prioritises fair value accounting over cost accounting. Due to the ability to recognise income immediately rather than gradually over the course of loans, SoFi’s book value may increase as a result of this strategy. According to Dominick Gabriele of Oppenheimer, SoFi’s fair value assumptions appear to be accurate in light of market and industry trends. But aligning SoFi’s tangible book value (TBV) with rivals might have a substantial impact and possibly lead to a 68% valuation reduction for the shares. Gabriele, however, thinks that the majority of this damage is already reflected in SoFi’s stock price. With a $7 price target, he reiterates his previous Outperform rating on SoFi shares, indicating 28% potential growth over the coming year.

YouTube video
GMT: 10 Jun, 2023 12:41 AM
Overall OutlookBearish
1. Market's WisdomBearish
1a. Market DataBearish
1b. Technical RecommendationSell
2. Crowd's WisdomPartially Bullish
2a. Social Media BuzzLower
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 

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