It’s been a harsh year for neo-banking firm SoFi Technologies (NASDAQ:SOFI), to say the least. Macroeconomic conditions have made it all but impossible for SOFI stock to hold its ground in 2022. Yet, the company has demonstrated progress in key areas. The most sensible course of action now is to wait until the share price reaches an important level — then, investors can have more confidence in SoFi Technologies.
$10 Will Be a Crucial Tipping Point for SOFI Stock
Suffice it to say that damage in SOFI stock has been considerable. The buyers made not just one, but three attempts to break through $25 in 2021, and they failed every time.
2022 wasn’t any easier for SoFi Technologies and for fintech businesses generally. The Federal Reserve raised interest rates multiple times, thereby discouraging borrowing and lending activity. Furthermore, high inflation made it difficult for businesses and individuals to save and invest money.
Consequently, SOFI stock has come down to the previously unimaginable $5 level. Sure, there may be a bargain here, but timing is critically important for successful investors. You want to see signs of life: an uptrend in the stock and a break of the psychologically significant $10 level, accompanied by heavy trading volume.
You’ll also want to keep a close watch on SoFi’s financials, not just the price action of the shares. What should investors look for, though?
Take Note of SoFi’s Membership and Revenue Growth
For one thing, investors should expect SoFi Technologies to continue expanding its revenue and its membership base. In those areas, the company has thrived despite the aforementioned macroeconomic obstacles.
Since 2019’s third quarter, SoFi has managed to build its membership count with each and every quarter. Just in the third quarter of 2022, the company added 424,000 new members, bringing the total to an astounding 4.7 million members.
Has SoFi’s membership growth translated to increased revenue? There may indeed be a correlation, as SoFi Technologies grew its Q3 2022 revenue 56% year over year to nearly $424 million.
Hence, the idea here isn’t to just give up on SoFi Technologies altogether. Rather, you can believe in the company for the long term, but just choose your entry price carefully.
While you’re at it, keep an eye on SoFi’s bottom line. The company isn’t currently profitable, unfortunately. However, it did secure a banking charter this year, so this should help SoFi earn trust among its clients and, possibly, a profitable profile.
Wait Patiently, Then Buy SOFI Stock
You can like SoFi Technologies without jumping into an investment in the company right now. There’s no need to be hasty, so feel free to pick a buy price and stick to your plan.
$10 is important because it’s in double-digit territory, and because it provides a buffer from penny-stock status (below $5). So, keep an eye on SoFi Technologies’ membership, revenue and income levels. At the same time, watch for a break of the $10 level — and then, if you’re ready, think about buying SOFI stock.
On the date of publication, David Moadel 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.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
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