Why I'm Raising My Target Price for SoFi Technologies

Any of you kids happen to catch SoFi Technologies SOFI CEO Anthony Noto on CNBC earlier? He sounded good. He also made it sound like SoFi, due to its somewhat higher income clientele, is not facing some of the problems other lenders might be. 

Now, I am going to have to paraphrase because, while I caught the interview and am thinking about what Noto said, I do not have a transcript in front of me.

What struck me was that Noto said that his firm had seen 50% inflows in Q2 and that, so far, Q3 was strong in the department as well. Noto said that SoFi has seen very strong debit spend in Q3, but that it did not come at the expense of deposit growth. His customers are spending on income and not due to some kind of wealth effect. He also is not seeing the kinds of issues with delinquencies that some other institution might be noticing.

Additionally, while credit cards and personal loans are performing in line with expectations, the firm is seeing very strong investment inflows. Basically, Noto acknowledged that SoFi is seeing improved deposits, improved net flows and improved spending. Not a bad interview in the least.

Recent News

Readers may have noticed last week that the U.S. Supreme Court declined the reinstatement of President Biden's most recent plan to forgive student debt for millions of borrowers instead of letting lower courts take the case. There had been a request made to lift a hold that the federal appeals court had placed on the president's program in a lawsuit led by several states. Biden had already forgiven $168.5 billion (with a "b") in student debt, mostly for borrowers who work in the public sector. By taking the weight off of the taxpayers and placing it back on the borrowers, such a ruling obviously plays well for lenders such as SoFi Technologies.

Another Look at the Charts

This is an up-to-date version of the chart I showed you post-earnings a few weeks ago:

I think I see something else now. It still involves a falling wedge pattern, but a larger-picture version of a falling wedge, and it gets rid of the double top that could also be seen as a double bottom. See what you think of this amended chart:

Now, the start of the wedge goes back to late July 2023, while first contact on the bottom of the wedge was not made until November. I left my original falling wedge outlined in purple on this chart, so readers can see how much larger this pattern is. I also turned that double top into a double bottom, which is also a pattern of bullish reversal.

This makes our pivot $8.06, not $7.52, and changes our target price as well, the stock's RSI is still strong but not overbought, while all three components of the daily MACD remain above the zero-bound. Additionally, as we set up on the double-bottom pattern, the larger falling wedge sets up a second technical reason to remain long this equity in my opinion.

Sofi Technologies (SOFI)

• Target Price: $10.25 (up from $9.50)
• Pivot: $8.06 (up from $7.52)
• Add Some: Down to 50-day SMA (currently $7.06)
• Panic: On a new post-August 5, 2024 low.

At the time of publication, Guilfoyle was long SOFI equity.