SoFi Technologies (SOFI) – Get Free Report stock has been on a mission lately. The online leader of next-generation banking, including deposits, loans, and credit cards, has rebounded from a steep selloff, rallying over 150% since the middle of May, including a nearly 20% rally on July 31.
The dramatic increase in SoFi’s stock price likely has many wondering if shares have gotten ahead of themselves, setting up another retreat.
Can SoFi’s stock continue climbing, or has it put in its high for 2023?
SoFi’s Banking Business Takes Off
SoFi’s stock rally was ignited by optimism that an overhang associated with student loan forgiveness was disappearing. More recently, shares are responding to the company’s better-than-hoped business performance.
Previously, short sellers had targeted SoFi’s stock because it would lose a lot of business if the Supreme Court had upheld President Biden’s student loan forgiveness program. On June 5, the company said it had lost over $300 million since the government enacted student loan forbearance broadly because of COVID in 2020.
However, the Supreme Court decided against Biden’s forgiveness plan on June 30. As a result, interest will soon begin accruing again, and millions of borrowers must resume making payments on October 1.
If the Supreme Court had upheld the plan, it would have eliminated up to $20,000 in student loan debt for people earning less than $125,000.
Eliminating SoFi’s student loan overhang shifts the attention back to its banking business, which is performing remarkably well, given economic uncertainty.
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In Q2, SoFi’s revenue rose 37% year-over-year to $498 million thanks to more loans and higher interest rates. SoFi is still losing money, but last quarter’s loss improved to just $0.06 from $0.12 per share one year ago.
Importantly, SoFi’s management believes its business will remain healthy. It upped its full-year revenue forecast to at least $1.97 billion from $1.96 billion and reiterated it expects to turn a profit in the fourth quarter.
SoFi Technologies Rally Could Continue
SoFi’s second-quarter financials will likely catch Wall Street analysts’ attention. Truist Securities analyst Andrew Jeffrey has already increased his price target to $16 from $11.
Jeffrey’s target represents almost 40% upside from SoFi Technologies July 31 closing price. That might not be the stock’s limit, though.
Technical analysis provides insight into investors’ aggregate sentiment, and point-and-figure charting can be used to determine possible price targets.
Following SoFi’s nearly 20% post-EPS jump on July 31, Real Money’s long-time technical analyst Bruce Kamich reviewed SoFi’s charts to see what could be next.
Kamich, who has analyzed charts for over forty years, likes what he sees.
“SOFI trades above the rising 50-day moving average line and above the rising 200-day moving average line. Trading volume has been more active since early May and tells me that investors are showing more interest in this name,” writes Kamich. “The On-Balance-Volume (OBV) line shows strength since May as buyers of SOFI have been more aggressive than sellers. The Moving Average Convergence Divergence (MACD) oscillator is turning upwards again to a fresh outright buy signal.”
This bullish set-up suggests that even if shares give back some recent gains, the path of least resistance appears higher.
How much higher? Kamich’s daily point and figure chart calculates a price target equal to Truist’s $16 per share outlook. However, a weekly point and figure chart suggests a much higher $21 price target, up 83% from July’s final closing price.
Of course, stocks don’t rise or fall in a straight line.
Point and figure charts don’t indicate how long it may take to reach a price, so there will likely be many ups and downs along the way.
Nevertheless, his targets suggest that if SoFI’s stock experiences pullbacks, they could be buying opportunities.
Get more of Kamich’s technical analysis at Real Money Pro.