SoFi Technologies’ (SOFI) shares have sold off about 38% year-to-date (YTD) amid rising competition, macroeconomic worries, and valuation concerns. Yet analysts appear to see even tougher terrain ahead for the digital banking and lending provider.
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SoFi Suffers Short Seller Attack
Adding to the company’s worries, SoFi has recently come under attack from short-seller Muddy Waters, which called the San Francisco, California-based company a “financial engineering treadmill.” The activist hedge fund alleged accounting malpractices that inflated SoFi’s financials and called for more than $312 million in loans on its balance sheet to be restated.
On April 2, SoFi launched the widely-anticipated Big Business Banking service, challenging legacy banks by offering 24/7 fiat and crypto services to business customers. However, the move barely moved the needle.
Keefe Bruyette Flags Concerns about SoFi’s Loan Pools
Now, analysts have turned more bearish on the company. On Thursday, Keefe Bruyette analyst Tim Switzer reaffirmed his Underperform (Sell) rating on SOFI stock and trimmed his price target from $20 to $17, suggesting about 4% upside.
Switzer noted that he came up with the lower price after separately revaluing each part of SoFi’s business. The company’s business comprises lending, tech platform, and financial services segments.
The four-star analyst also cited concerns from some investors about the worsening performance of SoFi’s securitizations, or loan pools. He further noted that while it was too early to give a definitive outlook on SoFi, early signs are “leaning negative.”
In addition, Switzer expects possible pressure on SoFi’s Q1 earnings from changes to how it marks certain assets on its balance sheet.
Wells Fargo Sees AI Job Risk Weighing on SoFi
Similarly, Wells Fargo’s five-star analyst Donald Fandetti assigned an Equal Weight (Hold) rating to SOFI stock and lowered his price target from $19 to $18, implying about 10% upside.
Fandetti noted that while tensions in the U.S.-Israel-Iran war are easing, fear of AI rendering many job roles obsolete remains a key source of headaches for investors and is the next hurdle for SOFI stock to cross.
Is SoFi Stock a Good Buy?
On Wall Street, analysts continue to approach SoFi Technologies’ shares with caution and have a Hold consensus rating on the stock. This is based on five Buys, eight Holds, and three Sells issued over the past three months.
However, the average SOFI price target of $23.88 suggests about 46% upside from current trading levels.
