For long-term growth, ignore volatility and watch SOFI stocks


Source: rafapress/

Sofi Technologies (NASDAQ:SOFI) had a tough week. For SOFI stock investors, this volatility is perhaps becoming expected. That’s definitely saying something. But I think better times are coming.

What caused the pain? Well, it’s earnings season, and SoFi released its report this week. But unfortunately, Bloomberg released SoFi’s first quarter numbers early, and the ensuing trading frenzy prompted markets to briefly halt trading in SOFI shares. However, after reviewing the company’s actual results on Tuesday, a bearish view of the company took hold.

Now, I’ve been bullish on SoFi in the past and I continue to remain bullish on this stock over the long term. There’s a lot to love about fintech’s potential to disrupt traditional banking sectors globally. And with so much of the world’s population still in the “underbanked” category, I think SOFI stock is one with an intriguing growth trajectory.

However, this is for the long term. In the short term, any set of headwinds can shake investor confidence. This week’s earnings report appears to be just the latest such catalyst.

That said, let’s see why SOFI stock is rebounding so strongly on Friday, up 15% so far.

SOFI stock offers high long-term growth

As mentioned, SoFi’s recent earnings report was not well received by the market. It’s not necessarily because of the numbers (his loss was in line with estimates, while earnings were well above estimates). Rather, the problem was the company’s second-quarter growth forecast, which was below analyst consensus.

I tend to take a positive view of this cautious outlook. On the one hand, one could certainly argue that there are many organic growth levers that SoFi can pull to generate growth. On the other hand, it is a harsh macro environment. With rates rising, it’s unclear how many consumers will want to refinance their debt at these levels

Additionally, given President Joe Biden’s views on possibly kicking the student loan, SoFi’s student loan business could suffer from here.

In my opinion, student loans will have to be repaid at some point. And the company’s move into auto lending and other areas is smart. It’s not just an American company either, so it has plenty of opportunities for global growth.

So, for those with a long-term view, look at how the company’s past results have exceeded expectations. If this trend continues, I think SOFI stock is one that has been far too depressed at these levels.

As of the date of publication, Chris MacDonald had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to publishing guidelines.

Chris MacDonald’s love of investing has led him to pursue an MBA in finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative long-term investment outlook.


Comments are closed.