SoFi Technologies (NASDAQ:SOFI) has not had an easy run as a public company, especially lately. SOFI stock is locked in a brutal bear market, with shares down more than 50% from their November high.
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Unfortunately, this is just how bear markets go. I have been bullish on SOFI stock for a while, specifically below $15 a share. Admittedly, that doesn’t make for a great return, with shares currently trading at $12 and change. But, on the plus side, I wasn’t pounding the table for SOFI stock above $20, either.
Even though SOFI stock has been thrashed in a difficult investing environment, there are a number of positives to consider.
A Closer Look at SOFI Stock
When I look at the chart for SoFi (more on the technicals in a minute), I see some pretty big spikes higher. One came in early November when many growth stocks were at multi-month lows. SOFI stock soared back toward its Q2 highs following better-than-expected earnings.
Another rally — this one much more short-lived — came in mid-January. Shares popped on news SoFi received regulatory approval to become a national bank. That even drew a price target upgrade to $30 from one analyst. From current levels, that would imply a return in excess of 145%.
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At the time, I warned about the impending sell-off following the news.
While these rallies in SOFI stock did not stick due to the overall downtrend in the stock market, they are promising developments for when the dust eventually settles.
SoFi Technologies is expected to deliver its next quarterly earnings report on March 1. It’s totally possible that it disappoints. But I’m not looking at SOFI stock as a one- or two-quarter play. I am looking at the long term.
Long-term estimates are hard to pin down. Let’s face it, a lot can happen between now and a few quarters from now, let alone a few years.
That said, analysts are anticipating 44% revenue growth to $1.44 billion for next year. And they expect revenue to increase at a compound annual rate of around 40% through 2024.
The downside to all of this? That SoFi isn’t profitable yet and not forecast to be for a couple of years. The upside is that if it can grow in this manner, that’s pretty darn impressive. I can’t imagine the stock price still trading at today’s levels if that’s the case.
Trading SOFI Stock
Click to EnlargeSource: Chart courtesy of TrendSpider
Following that freakish explosion at the start of 2021, SoFi stock pulled back and bottomed at $13.14. While that level went untouched for the remainder of the year, it’s playing quite the role now, mainly as resistance.
SOFI stock has technically put in a series of higher lows. However, it’s my opinion, that all it would take is one good flush to the downside to retest last month’s low at $10.51.
Without knowing when the market sell-off will end or how far it will ultimately go, it’s hard to know when or if SOFI stock has bottomed.
The Bottom Line on SOFI Stock
From here, though, I would love to see a move back above the Q4 low at $13.66, as well as the 50-day moving average. That could really open the door to higher prices, putting $15 to $16.50 in play. The latter part of that range is last month’s high.
On the downside, SoFi is trying to hold the 10-day and 21-day moving averages as support. However, there’s no guarantee that will be the case.
If it can’t reclaim and hold these measures, a move back below $12 could put the $10.50 level in play. Bulls can be hopeful that this won’t happen, but they have to be realistic and understand that it could.
On the date of publication, Bret Kenwell held a long position in SOFI. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.
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