SoFi Technologies Stock Rises 42% in a Month: Buy, Hold, or Sell?

Shares of SoFi Technologies, Inc. SOFI have witnessed a notable surge of 42.4% in the past month. This rise is significant, especially compared to the 4% rise in its industry and the 1.1% rise in the Zacks S&P 500 composite.The stock's closing price in the last trading session was $11.19, just shy of its 52-week high of $11.34. The rise can be largely attributed to the positive sentiment surrounding the company’s financial technology platform, Galileo. Recently, Galileo expanded its wire transfer services for other fintech companies.Image Source: Zacks Investment ResearchGiven the current strength of SOFI shares, many investors may be tempted to buy the stock. Let’s examine the factors influencing the company’s performance and prospects.Increasing Digitalization is a PositiveThe continuous digitalization across all industries, particularly in the financial sector, presents a significant opportunity for SOFI. As a company that focuses on online banking and offers a comprehensive suite of products and services, SOFI is well-positioned to benefit from this trend.The demand for online financial platforms is expected to rise, and SOFI's technology platform, Galileo, is not only integral to its banking business but is also being adopted by other financial firms. This expansion positions SOFI to capture more market share from traditional banks. Conventional banking giants like JPMorgan JPM, Bank of America BAC, and Wells Fargo WFC are more mature and are experiencing slower growth.Refinancing Demand Set to Boost SOFIDeclining federal fund rates, driven by easing inflation, present favorable conditions for the financial sector. In September 2024, the Federal Reserve significantly reduced its target range for the fed funds rate by 50 basis points, bringing it down to 4.75%-5%. This rate cut extended a trend of reductions throughout 2024, which is expected to continue into 2025. Such an environment is likely to promote increased credit activity and reduced depositor charges, particularly benefiting SOFI’s lending operations.Consumers who took loans during periods of high interest rates for student loans, personal loans, and mortgages may now turn to companies like SOFI to refinance at more favorable rates.Strong Top and Bottom-Line ProspectsThe Zacks Consensus Estimate for SOFI’s 2024 earnings is pegged at 10 cents, indicating substantial growth of 128% from the previous year. Earnings for 2025 are expected to increase 161% compared to the year-ago actuals. The company’s sales are projected to grow 19% and 15% year over year in 2024 and 2025, respectively.In the past 60 days, there have been three upward revisions in earnings estimates for 2024 with no downward revision, indicating strong confidence among analysts regarding the company’s future performance.Stock Looking PriceyCurrently, SOFI's stock appears to be overvalued. The forward 12-month Price/Earnings ratio stands at 47.58X forward earnings, which is way higher than the industry’s average of 15.12X.Image Source: Zacks Investment ResearchMoreover, the stock is trading above its 50-day moving average, and the relative strength index suggests that it is in the overbought zone.SOFI's Relative Strength Index< Image Source: Zacks Investment ResearchHold Off for a More Favorable Entry PointThe stock’s recent performance and strong growth prospects are promising, but the current high valuation and presence in the overbought zone suggest that waiting for a more favorable entry point would be a prudent strategy.As the financial sector continues to evolve, SOFI’s innovative platform and strong market position indicate that it remains a company to watch. However, timing the investment is crucial for maximizing returns.SOFI currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Bank of America Corporation (BAC): Free Stock Analysis Report Wells Fargo & Company (WFC): Free Stock Analysis Report JPMorgan Chase & Co. (JPM): Free Stock Analysis Report SoFi Technologies, Inc. (SOFI): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks