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As SoFi Stock Continues to Slide, Consider Bigger Questions

SoFi (SOFI) stock has insider buying on its side but that’s a subjective signal.
It is still losing big at a bad time to do so.
Investors should question SoFi’s offer to be all things to everyone. 
Source: Michael Vi / Shutter…

  • SoFi (SOFI) stock has insider buying on its side but that’s a subjective signal.
  • It is still losing big at a bad time to do so.
  • Investors should question SoFi’s offer to be all things to everyone. 

Source: Michael Vi / Shutterstock

I would characterize the current investment environment surrounding SoFi Technologies (NASDAQ:SOFI) stock as mixed. It’s so cheap relative to its historical prices that it holds some attraction.

That said, there’s plenty not to like and it didn’t fall this far for no reason. Err on the side of caution in this case because prudence is key now. 

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SOFI
SoFi
SoFi Technologies

The Good with SOFI Stock 

Insider buying serves as a positive catalyst in most cases. If people directly related to a company are willing to invest the thinking goes, that serves as tacit approval that the future is strong. 

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So the news that CEO Anthony Noto and Director Anthony Schwartz purchased 39,000 and 15,000 shares respectively on May 13 was positive, right?

The answer is up to one’s interpretation. Noto now controls 3,199,339 shares and Schwartz owns close to 230,000 following their respective transactions. 

A skeptical take is that each purchase is relatively small and more of a PR move than anything else. It reflects positively on SoFi but whether those shares appreciate or not is insignificant to Noto and Schwartz in the grand scheme of things. 

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The Bad with SOFI Stock 

SoFi Technologies continues to lose lots and lots of money. In fact, the company lost $110.357 million in the three months ended March 31. That translated to a 14-cent loss per share, slightly better, by 1 cent, than Wall Street was anticipating. 

The slight beat is encouraging. Losing $110 million is not. Certainly not in an inflationary where recession worries seem to be mounting by the day. 

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On top of that, SoFi has to contend with potential student loan debt cancelation and any further extension of the moratorium. Its most recent extension sent share prices sinking. 

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The Ugly 

But here’s what really miffs me about SoFi Technologies. SOFI stock is a one-stop-shop for digital financial services. Its most recent earnings report characterized the company as “a member-centric, one-stop-shop for digital financial services that helps members borrow, save, spend, invest, and protect their money.”

But the rub is that this serves SoFi more than the customer. The company’s homepage lists 37 financial products that it offers to consumers. Any one of which is complex and underpinned by significant business operations. 

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That raises the question of specificity. As a consumer do you believe the company can efficiently manage each of those 37 financial products? Or does to benefit them more than the customer? The skeptic in me knows that SoFi reduces the cost of customer acquisition if it can sell a mortgage owner student loans, investment advice, and credit cards. That same skeptic doesn’t believe that there is efficiency between them though. 

That’s why I’ve never bought the one-stop-shop argument SoFi proffers. 

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Takeaway

SOFI stock isn’t looking any better despite insider buying. The company hasn’t proven much and its one-stop-shop marketing efforts have yet to translate into real-world success. 

On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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