SoFi Technologies, a prominent player in the fintech sector, saw its shares exhibit a notable turnaround in Wednesday’s trading session, signaling a potential end to a two-day decline. This reversal in fortune came as Mizuho Securities stepped in to offer a bullish perspective, suggesting that the recent downturn might have been an overreaction by investors.
The downward trajectory initially commenced on Monday, following SoFi’s release of its quarterly earnings report, which surpassed market expectations on both earnings and revenue fronts. Despite the positive results and an upward revision of its full-year forecasts, the company’s projections for the upcoming quarter fell short of analyst estimates. Consequently, SoFi’s stock experienced a sharp 10% decline on Monday, followed by an additional 3.8% dip on Tuesday. These declines were fueled by concerns among investors regarding a higher-than-anticipated charge-off rate for loan losses, as well as apprehensions surrounding the company’s financial forecasts and fair-value accounting practices.
However, Mizuho Securities, led by analyst Dan Dolev, adopted a contrarian view, emphasizing a more optimistic outlook in their research note titled “Overrated Fears + Underrated Accomplishments = Buying Opportunity.” The Mizuho team underscored the importance of taking a longer-term perspective and highlighted several positive aspects of SoFi’s business, including its success in selling loans and its ability to capture market share. Reiterating their Buy rating, Mizuho set a target price of $12 for SoFi’s stock.
Despite the rebound witnessed during Wednesday’s trading session, SoFi’s stock remained down approximately 12% over the course of the past three days, marking its most significant three-day decline since early March. Year-to-date, SoFi’s stock has endured a 31% decrease, although it has exhibited a notable 42% gain over the past 12 months.
The recent market dynamics surrounding SoFi underscore the inherent volatility in the fintech sector and highlight the importance of weighing short-term fluctuations against longer-term fundamental factors when making investment decisions.