When it comes to penny stocks, the term usually coincides with start-up companies or companies looking to recover from a downturn in their business. In some cases, these cheaper names can also fold into high-profile companies. We put together an article: 10 Top Penny Stocks To Buy Under $5 That Are Household Names and discussed high-profile companies trading as penny stocks. Does this mean they’re set to fail? That’s something yet to be seen. Can they recover? Of course, there’s a chance of bouncing back.
A few years ago, we wrote about a popular EV penny stock, Nio Inc. (NYSE: NIO). It was a beaten-down name that fell from over $10 to as low as $1.19 in 2019. But as you’ll see, NIO stock is far from that $5 threshold as of today. While penny stocks may coincide with companies falling on hard times, they also offer potential discounts to the market. In NIO’s case, that was a pretty big “discount” if you had seen the stock in 2019 and early 2020.
Will SOFI Stock Join The List Of Penny Stocks?
When you see a constant downtrend in certain stocks, it begs the question: will they become a penny stock? For traders looking at SoFi Technologies (NASDAQ: SOFI), that question may have started coming up. The big reason is that shares of the fintech stock reached fresh 52-week lows on April 7th. Weighing in at $7.64, SOFI stock is $2.64 shy of the penny stock threshold but will it break below it?
While troubles have come about since the end of last year, the latest jab comes after the latest round of lacklustre guidance. SoFi Technologies reported that President Biden’s latest directive to extend the federal student loan payment moratorium through August 31, 2022, would impact SoFi’s performance.
In particular, SoFi’s Adjusted Net Revenue and Adjusted EBITDA guidance came in much lower than initially expected. Instead of the $1.47 billion in ANR, SoFi expects $1.47 Billion. Initially, SoFi gave Adjusted EBITDA guidance of $180 million. Now, that expectation is just $100 million.
SOFI Stock Forecast
With an uncertain future for 2022, what will this mean for SOFI stock, and will it join the list of penny stocks to watch? Time will undoubtedly tell, but with shares down more than 50% year to date, there’s easily cause for concern for anyone holding shares right now.
A slew of recent analyst adjustments also came out within the past 24 hours:
- Oppenheimer SOFI Stock Forecast: Maintains Outperform, Price Target Cut to $13
- Mizuho SOFI Stock Forecast: Maintains Buy, Price Target Cut to $14
- Wedbush SOFI Stock Forecast: Price Target Cut to $15
- BofA Securities SOFI Stock Forecast: Maintains Neutral Rating, Price Target Cut to $12
- Goldman Sachs SOFI Stock Forecast: Maintains Neutral Rating, Price Target Cut to $10
In response to the Administration’s latest moratorium extension and adjusted guidance, Anthony Noto, CEO of SoFi, expanded on his outlook, including the potential for continued growth:
“SoFi remains incredibly well positioned to drive continued strong growth in revenue, members, and products, along with continued and improving profitability, despite the fact that our student loan refinancing business has operated at less than 50% of pre-COVID levels for the last two years…Even with the assumption of no end to the moratorium in 2022, our new full-year 2022 financial guidance represents approximately 45% year-over-year Adjusted Net Revenue growth to $1.47 billion, a tripling of Adjusted EBITDA to $100 million, and a doubling of margins.”
Should You Buy SOFI Stock? The Final Thoughts
Deciding if the risk is worth the potential reward is up to you. Given the current climate for interest rates and the extension of the student loan moratorium, that are numerous factors to consider. It’s also worth noting that SoFi is a former SPAC merger target. SOFI stock has fallen victim to the same type of dilution that many other SPACs have.
Something else to consider is that this past January, SoFi also received approval from the Office of the Comptroller for a national bank charter. This allows the company to add to its financial products and services suite. In conjunction with this event, SoFi completed the acquisition of Golden Pacific Bancorp in February, allowing it to begin offering new features to members. Among these features are things like automated savings and differentiated checking accounts.
Though the company is over ten years old, it is still relatively new in the stock market. Today shares hit new record lows, but whether or not that means a “path to a penny stock” is yet to be seen. If SOFI is on your watch list right now, leave a comment about your outlook for the company and whether or not you think new lows are in store.