SoFi is the biggest position in my investment portfolio that is not a fund. With that in mind, one can see that how SoFi performs in the market is a very big deal to how I, myself, perform in the market. Luckily, SoFi has done very well this year. Over the last month, however, it has fallen by more than 17% at time of writing.
I like SoFi. I use their products. I invest in their funds. I own shares in the company. I’m obviously very bullish on this stock. That said, I have actually not been buying as many shares this year as I did last year. I bought a lot of shares last year. SoFi then increased in value dramatically this year. I didn’t buy as much SoFi stock because the value of the company increased, and I didn’t want to buy as much at the higher prices. Now, however, the stock is looking a lot more appealing at these new prices. I like buying businesses when they are on sale.
Not everyone shares my love of SoFi. Wedbush analyst David Chiaverini is not a fan of the stock at all. He believes that SoFi will lose more than half of its value over the next 12 months. A big reason for this is loans.
SoFi is a big provider of loans. When SoFi loans out money, they don’t simply wait to collect the money back with interest. They try to sell the loan. That way they can make a profit much faster. This has worked well as SoFi has been able to create loans, sell them, and make a profit very quickly.
David Chiaverini points out that this is not all there is to it though. If the person who received the loan from SoFi doesn’t pay, it will still hurt SoFi. SoFi will have to face part of the losses if the one who received the loan refuses to pay. These losses are capped, but SoFi hasn’t stated what that cap is.
Obviously, that is a risk to SoFi’s bottom line. Is it a risk that should send SoFi to $3 a share? Obviously, I don’t think so. I wouldn’t be a shareholder if I did. David Chiaverini, however, disagrees with me.
All that being said, I’m very bullish on SoFi. I see SoFi as a company that is growing very quickly. I see SoFi as a company that is reaching profitability. I see SoFi as a company that is producing revenue through many financial products and services, loans simply being one of them.
Time will tell if I am right, but I am very bullish on this company.
I created a list of finance themed tools that I personally use to build wealth. Check it out and see if one will help you – https://cwt.finance.blog/finance-tools/
If you liked this article, you’ll probably like the next one. Enter your email down below and get all our future posts all about the stock market emailed directly to you!
Finance by CWT 