Is It Worth Taking a Gamble on SoFi Stock in 2022?

: SOFI | SoFi Technologies Inc. News, Ratings, and Charts

SOFI – SoFi Technologies’ (SOFI) lending business is struggling amid the persistently high inflation and the Fed’s consecutive rate hikes. The stock has lost more than 60% in 2022. With the central bank far from ending its rate hike campaign, will it be worth owning SOFI? Keep reading….

Digital financial services company SoFi Technologies, Inc.’s (SOFI - Get Rating) shares got hammered amid high inflation and rising interest rates this year. The current macro environment is causing a persistent challenge for SOFI’s lending business.

Amid consecutive federal rate hikes, demand for loans has declined drastically in 2022. SOFI’s home loans came in at $216.25 million for the third quarter ended September 2022, down 72.7% year-over-year, while its student loans came in at $457.18 million, down 52.8% year-over-year.

However, Anthony Noto, SOFI’s CEO, said, “Our bank charter is enabling new flexibility that has proven even more valuable in light of the current macro environment, and the economic benefits are already starting to materialize and positively impact our operating and financial results.”

SOFI has gained 21.8% over the past month to close the last trading session at $5.99. However, it has lost 62.9% year-to-date and 74.3% over the past year.

Here is what could shape SOFI’s performance in the near term:

Consecutive Rate Hikes and Declining Mortgage Demand

Amid consecutive rate hikes, borrowing demand has plunged dramatically this year. Mortgage demand is hovering around its lowest levels since 1997.

According to Joel Kan, an MBA economist, “Elevated rates continue to put pressure on both purchase and refinance activity and have added to the ongoing affordability challenges impacting the broader housing market, as seen in the deteriorating trends in housing starts and home sales.”

Such grim industry circumstances might not bode well for SOFI.

Weak Bottom Line

For the third quarter that ended September 30, 2022, SOFI’s total net revenue came in at $423.99 million, up 55.9% year-over-year. However, its net loss came in at $74.21 million, up 147% year-over-year, while its loss per share came in at $0.09, up 80% year-over-year. Also, its cost of operations increased 19.4% year-over-year to $83.08 million.

Poor Profitability

SOFI’s trailing-12-month net income margin of negative 28.81% is lower than the industry average of 27.86%. Its trailing-12-month ROCE and ROTA of negative 9.16% and 2.47% are lower than the industry averages of 11.59% and 1.16%, respectively.

POWR Ratings Reflect Bleak Prospects

SOFI has an overall F rating, equating to a Strong Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

SOFI has an F grade for Quality, consistent with its negative profitability margins.

It has a D grade for Value. Its forward Price/Sales of 3.60x is 24.8% higher than the industry average of 2.88x.

In the 108-stock Financial Services (Enterprise) industry, SOFI is ranked #104. The industry is rated F.

Click here for the additional POWR Ratings for SOFI (Growth, Momentum, Stability, Sentiment).

View all the top stocks in the Financial Services (Enterprise) industry here.

Bottom Line

SOFI has witnessed a significant drop in loan demand for its 2022 third quarter. Moreover, the stock is trading below its 200-day average of $7.24. Given its negative profitability and the ongoing macro headwinds, I think SOFI might be best avoided.

How Does SoFi Technologies, Inc. (SOFI) Stack up Against Its Peers?

While SOFI has an overall POWR Rating of F, one might consider looking at its industry peers, Forrester Research, Inc. (FORR - Get Rating), which has an overall A (Strong Buy) rating, and MGIC Investment Corporation (MTG - Get Rating), Everi Holdings Inc. (EVRI - Get Rating), and Nelnet, Inc. (NNI - Get Rating), which have an overall B (Buy) rating.

Want More Great Investing Ideas?

3 Stocks to DOUBLE This Year


SOFI shares were trading at $5.89 per share on Tuesday afternoon, up $0.03 (+0.51%). Year-to-date, SOFI has declined -62.75%, versus a -15.82% rise in the benchmark S&P 500 index during the same period.


About the Author: Riddhima Chakraborty


Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
SOFIGet RatingGet RatingGet Rating
FORRGet RatingGet RatingGet Rating
MTGGet RatingGet RatingGet Rating
EVRIGet RatingGet RatingGet Rating
NNIGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


Stock Market Update: It’s Complicated!

The S&P 500 (SPY) may have bounced 17% from recent lows, but the outlook for stocks from here is...in a word...COMPLICATED. Read on to get Steve Reitmeister full market outlook and trading plan for this complicated market environment.

Becoming More Bullish on Stocks, But...

Stocks are on a roll with the S&P 500 (SPY) up more than 10% from the recent lows. Before you start getting too giddy, you should read this updated market outlook and trading plan Steve Reitmeister.

Stock Market Held Hostage

Uncertainty is the term most often applied to this stock market. Uncertainty over tariffs. Uncertainty of whether the S&P 500 (SPY) will fall into bear territory. Uncertainty over what happens next. Steve Reitmeister dives into the uncertainty to make sense of the market in this week’s commentary...

Stock Market Standing on the 50 Yard Line

Steve Reitmeister contemplates where the stock market stands now and what happens next in trying to stay on the right side of the market action. One path points to bear and one to new highs for the S&P 500 (SPY). Which will it be?

Bear or Bull Market?

The S&P 500 is on the brink of bear market territory...but that outcome is not a given at this time. Steve Reitmeister shares insights gleaned from his 45 years of investing to shine a light on current conditions along with his top picks...

Read More Stories

More SoFi Technologies Inc. (SOFI) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All SOFI News