SoFi Technologies Inc. (NASDAQ: SOFI), reached a high of 14.42 dollars this morning, a level last seen in early 2012.
The financial services company’s stock has risen over 30% since the election, amid expectations that it will be able to benefit from a more accommodating regulatory environment under the new government.
The recent rise in SoFi’s stock could be related to Upstart, which spoke of improving credit trends during its earnings call last Thursday. This comment bodes well for the personal lending industry as a whole.
Despite the massive rally there are reasons to believe that SOFI has more juice left in it.
What could drive SoFi stocks?
SoFi stock is still attractive because CEO Anthony Noto believes it will eventually become one of the largest US banks. In the earnings release, he said that it was a question of when and not if.
Fintech firm increased revenue by over 20% in the last 17 quarters despite higher interest rate pressure on its lending business.
The momentum will only get stronger now that the Federal Reserve is cutting rates and Donald Trump will be taking office in the next few months.
The US central Bank lowered its key rate by another 25 basis point on November 7 .COM.
SoFi is in a good position, as it has seen rapid growth of its members and products.
In the third quarter, the personal finance company saw an increase of 35% in members and 31% in products.
SOFI shares, however, are not attractive to income investors because they do currently pay a quarterly dividend.
Are SoFi shares currently overvalued?
According to recent data from Mintel, around 20% of Americans are looking for a credit card or a savings account.
This could mean more business for SoFi Technologies by 2025.
SOFI offers checking accounts, investing solutions and other financial services. It has grown from a student loans expert to a full service financial company.
The stock price could also be boosted by the diversity of its business model.
Note that SoFi is currently trading with a price-to-earnings ratio of close to 61.
This is not cheap, but it’s also not unreasonable for a company whose revenue grew by 30% year-over-year in its last reported quarter.
Wall Street expects SoFi Technologies will earn 12 cents per share this year, and more than double it to 28 cents in 2025.
Shares of this fintech company shouldn’t be too expensive at the current price, given that they are expected to grow by such a significant amount over the next 12 months.
This post SoFi stock reaches new high of $14.42 – is it time to profit? This post may be updated as new information unfolds
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