Fintech company SoFi (SOFI), which went public through a reverse merger with Chamath Palihapitiya’s SPAC, has had a volatile ride as a publicly traded company. It surged over 11 percent on Sept. 22 but trades 40 percent below its 52-week highs. Is SOFI a good stock to buy and can it rise to its 52-week highs anytime soon?
Usually, Reddit group WallStreetBets (WSB) and Wall Street analysts don’t have convergent opinions about stocks. Even if we leave out the typical meme names like AMC Entertainment and GameStop that trade way above their target prices and fundamental values, many of the other Reddit stocks seem to be trading above what they should, based on the fundamentals.
Wall Street analysts have a bullish forecast for SOFI stock.
Often, there are exceptions where both Wall Street and WSB traders are bullish on a stock, as we see with SOFI now. Wall Street analysts have a bullish forecast for SOFI stock. Among the five analysts polled by TipRanks, four analysts rate the fintech company as a buy, while one analyst has a hold rating.
SOFI's average target price of $24.50 is a premium of over 45 percent. The street high target price of $30 implies an upside of 78 percent. If the stock rises to the street high target price, it would surpass the 52-week highs.
Jefferies is also bullish on SOFI stock.
Jefferies is the new bull in town when it comes to SOFI. The brokerage initiated coverage on the stock with a buy rating and a $25 target price. The target price is very near the stock’s average target price. Jefferies used a sum of the parts valuation approach in valuing SOFI and thinks that the target price is still conservative.
SOFI bank charter
Jefferies is bullish on SOFI for various reasons, including its ownership of Galileo and the expected bank charter. Jefferies also cited its strong digital platform and omnichannel presence to support the bullish thesis. The brokerage pointed to SOFI’s diversified business model and the cross-sell possibilities due to the wide array of products and services on the platform.
Reddit group WSB is also bullish on SOFI stock.
Previously, SOFI stock was popular on WSB, which saw the stock rising to its all-time highs. The stock is currently the most talked about name in the group. A member with the username Gaebril thinks that neobanks like SOFI are the future of finance and will challenge legacy banks like Wells Fargo and Bank of America in the future.
In February 2021, JPMorgan issued a bullish note on the fintech industry and sees it transforming finance and even termed it a bigger story than cryptocurrencies.
WSB members are bullish on SOFI amid the expected bank charter. A bank charter, which SOFI is expected to get by the end of 2021, will help it improve its earnings and will also support its valuation.
Best fintech stocks to buy now
Fintech stocks have whipsawed in 2021. The year started well and there was the stellar listing from BNPL (buy-now-pay-later) company Affirm. The company delayed the listing in 2020 to increase the IPO pricing and the decision paid off.
However, fintech names, most of which are growth stocks, tumbled after the strong start in 2021. They have since recovered and BNPL names have especially done well over the last month.