The Best Move to Make Now With SOFI Stock

Stock Market

Are you ready to hold shares of an unloved company through a make-or-break event? If so, then you have an opportunity right now. That’s because neo-banking firm SoFi Technologies (NASDAQ:SOFI) is set to report its third-quarter earnings results on the morning of Nov. 1. Everybody and their uncle seems to be pessimistic on SOFI stock, and that’s your signal to take a long position.

Sometimes, being contrarian means being counterintuitive. How can any sensible investor hold SoFi shares when it’s obvious that the company’s Q3 earnings report will be a disaster? That’s the whole point, though: The “obvious” trade is oftentimes the wrong one.

It’s a gamble, to be sure. Don’t bet the farm on SoFi Technologies, but don’t reject the company out of hand either as a less-than-dismal earnings result might be the catalyst that sparks a stunning rally.

Here’s Why People Hate SOFI Stock

During SoFi Technologies’ second-quarter 2022 conference call, CEO Anthony Noto presented an arsenal of bragging points in defense of his downtrodden company. Here’s what he pointed out:

  • The company’s financial services net revenue grew 78% year over year (YOY).
  • SoFi’s technology platform net revenue increased 85%.
  • Moreover, SoFi Technologies added 450,000 new members in Q2, bringing the total members count to 4.3 million, up 69% YOY.
  • Plus, the company earned a banking charter, thereby allowing SoFi to offer enticing annual percentage yields (APYs) to its customers.

Yet, investors have unceremoniously dumped their SOFI shares since Noto noted those bragging points. What has SoFi Technologies done to deserve its share-price beating during the past three months?

The answer is nothing, really. Macroeconomic conditions, particularly high inflation, and the end of central-bank easy-money policy, are making traders uneasy about financial businesses in general and SoFi Technologies in particular.

SoFi Is Capable of Exceeding Expectations

So, here’s what Wall Street is expecting from SoFi Technologies in the company’s upcoming earnings report. Analysts anticipate that SoFi will post $391.84 million in third-quarter revenue and a net earnings loss of 10 cents per share.

SoFi reported $362.53 million in Q2 2022 revenue and an earnings loss of 12 cents per share. Hence, Wall Street isn’t expecting a huge sequential improvement and still doesn’t think that SoFi Technologies is capable of posting a quarterly profit.

Imagine the analysts’ and investors’ shock and awe, then, if SoFi does better than expected. What if the company had a breakeven quarter — or better yet, positive earnings? And, what if SoFi Technologies’ banking charter enabled the company to generate more revenue than the experts anticipated?

This Is the Best Move to Make Now With SOFI Stock

There’s no guarantee that SoFi Technologies will deliver a positive revenue or profit surprise. However, the overall mood is negative and the bar is low enough that SoFi can clear it.

The best move right now, therefore, is to put a small amount of money on the chopping block with SOFI stock. Sure, it’s a gamble, but that’s why it’s important to maintain a small position size. Besides, you never know what might happen. Just maybe, an unexpected beat will mark the start of a major turnaround for SoFi Technologies.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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