SoFi Technologies (SOFI – Research Report), the Financial sector company, was revisited by a Wall Street analyst today. Analyst David Chiaverini from Wedbush maintained a Sell rating on the stock and has a $3.00 price target.
David Chiaverini has given his Sell rating due to a combination of factors surrounding SoFi Technologies’ recent financial strategies and market performance expectations. The company’s pivot from a capital deployment strategy to one focused on capital relief and balance sheet building has been noted as a significant shift. This transition is evident from the slowing of balance sheet growth and the increased frequency of loan sales and securitization. Additionally, the issuance of a large number of shares due to the equity conversion of its convertible notes has introduced the risk of substantial equity dilution for current shareholders, with the potential for around 12% dilution if all 2026 convertible notes are exchanged.
Moreover, Chiaverini is cautious about the company’s future revenue growth and rising credit costs, projecting these trends to continue through 2024, which supports the Underperform rating. The strategic financial maneuvers, such as issuing new convertible senior notes and engaging in capped call transactions, are designed to manage dilution and redeem high-cost preferred stock. However, these actions do not appear to offset concerns about the company’s growth and cost trajectory. Chiaverini’s report suggests that the anticipated financial outcomes of these strategies, including interest rate assumptions and the potential for additional equity offerings, contribute to a less optimistic outlook for SoFi Technologies’ stock performance.
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SoFi Technologies (SOFI) Company Description:
SoFi Technologies is an online personal finance and bank holding company. It offers lending and financial services products, including student, home, and personal loans. It also provides technology products and solutions. SoFi closed a bank merger and became a bank holding company in 2022.
Read More on SOFI:
- Notable open interest changes for February 28th
- SoFi Technologies call volume above normal and directionally bullish
- Cathie Wood’s ARK Investment bought 656.9K shares of SoFi Technologies today
- Cathie Wood’s ARK Investment bought 2.8M shares of SoFi Technologies
- SoFi Technologies Announces New Chief Risk Officer
