Stock Analysis

Shareholders in SoFi Technologies (NASDAQ:SOFI) have lost 67%, as stock drops 7.7% this past week

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NasdaqGS:SOFI
Source: Shutterstock

Investing in stocks comes with the risk that the share price will fall. And unfortunately for SoFi Technologies, Inc. (NASDAQ:SOFI) shareholders, the stock is a lot lower today than it was a year ago. The share price has slid 67% in that time. We wouldn't rush to judgement on SoFi Technologies because we don't have a long term history to look at. Even worse, it's down 13% in about a month, which isn't fun at all. We do note, however, that the broader market is down 8.0% in that period, and this may have weighed on the share price.

After losing 7.7% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

See our latest analysis for SoFi Technologies

Given that SoFi Technologies didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last year SoFi Technologies saw its revenue grow by 53%. That's a strong result which is better than most other loss making companies. Meanwhile, the share price slid 67%. Typically a growth stock like this will be volatile, with some shareholders concerned about the red ink on the bottom line (that is, the losses). Generally speaking investors would consider a stock like this less risky once it turns a profit. But when do you think that will happen?

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
NasdaqGS:SOFI Earnings and Revenue Growth September 29th 2022

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. If you are thinking of buying or selling SoFi Technologies stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

SoFi Technologies shareholders are down 67% for the year, even worse than the market loss of 19%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. With the stock down 0.4% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We've spotted 3 warning signs for SoFi Technologies you should be aware of.

SoFi Technologies is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

Valuation is complex, but we're helping make it simple.

Find out whether SoFi Technologies is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

About NasdaqGS:SOFI

SoFi Technologies

SoFi Technologies, Inc. provides digital financial services.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation2
Future Growth5
Past Performance0
Financial Health2
Dividends0

Read more about these checks in the individual report sections or in our analysis model.

High growth potential and slightly overvalued.