SOFI Stock’s Forecast: How High Can It Go on the Reddit Short Squeeze?

Mohit Oberoi, CFA - Author

Jun. 29 2021, Published 7:12 a.m. ET

Social Finance (or SoFi), which went public through a reverse merger with Chamath Palihapitiya–backed Social Capital Hedosophia Holdings V (IPOE), is a hot topic on WallStreetBets. How high can SOFI stock go as the Reddit traders attempt another short squeeze?

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SOFI stock gained 4 percent on Jun. 28, and was higher in premarket trading on Jun. 29. The stock was targeted by Reddit traders in early June as well. Currently, SOFI stock is down 31.8 percent from its 52-week high.

SOFI stock's forecast looks bullish

According to CNN Business, analysts' median target price for SOFI is $27.50, 43 percent higher than its current price. In early June. Rosenblatt Securities initiated coverage on SOFI with a "buy" rating and a $30 target.

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Rosenblatt analyst Sean Horgan is bullish on SOFI and sees any dip as a buying opportunity. He expects a bank charter approval for the company before the end of 2021, and thinks that will add more than 25 percent to the company’s EBITDA estimates.

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SOFI stock on Reddit group WallStreetBets

WallStreetBets Redditors are bullish on SOFI stock, with a post describing the company as a “fintech disruptor.” Another post, which was upvoted almost 1,300 times at the time of this article's writing, talked about the stock's “great potential.” It highlighted the Galileo acquisition, and said that SoFi competitor Marqeta is valued at $15 billion.

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SOFI stock's short interest

This year, WallStreetBets members have pounced on stocks with high short interest, triggering epic short squeezes in AMC Entertainment and GameStop stock.

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According to Fintel, SOFI had a total short volume of over 9 million on Jun. 28, its highest absolute short volume in at least 10 days. However, when that's measured as a percentage of total volumes, SOFI's short volume ratio was just under 16 percent that day, compared with 45 percent on Jun. 24.

How high can SOFI stock go?

SOFI stock could rise another 10 percent in the short term. In the medium term, the stock could see more upside if it gets a bank charter. The company is among the most exciting fintech opportunities. SOFI stock looks like a good buy around $20.

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SOFI stock has crossed above its 50-day and 100-day SMAs (simple moving averages), a bullish signal. The next resistance for the stock could be its 30-day SMA of $20.77.

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SoFi's growth looks intact

SoFi boasts a solid growth outlook, and its member count growth has improved for the last seven quarters. The company has turned EBITDA-positive, and expects its margins to expand to 32 percent by 2025.

The company forecasts its revenue growing by 43 percent compounded annually between 2020 and 2025. That figure looks compelling yet achievable, considering SoFi's growth trajectory so far and other drivers, such as crypto trading.


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