SoFi's Big Turnaround: Student Loan Resumption May Fast-Track Profits

Mid Caps 4 replies 0 votes 1701 views Tags:  Debt RefinancingFinanceFintechInvestingprofitabilitySoFiStock MarketStudent Loans
Amy Swift 11 months

SoFi Technologies is on a roll and is turning heads in the finance world. Their stock recently got bumped up to a strong buy, which is pretty huge news. This change is mainly because of the resumption of student loan payments - yeah, you heard it right. SoFi's pretty darn good at helping people refinance their loans, and with payments starting back up again, that's gonna be a big boost to their profits.

Even better, SoFi's likely to hit profitability sooner than they thought. They were initially expecting to reach that sweet spot in Q4, but now, Q3 is looking more likely. But just a heads up for all you eager beavers out there - the stock's currently looking a bit overbought, so it might be worth waiting for a pullback before diving in.

Now, remember when I mentioned SoFi stock surging 40% since I last recommended it as a buy? Well, a big factor was the new debt ceiling deal, allowing for the resumption of student loan payments. And guess what? Student debt refinancing used to be a major part of SoFi's business, so they're likely grinning from ear to ear right now.

SoFi's also bouncing back from a tough spot. In 2019, student loans made up 60% of their total revenues, but with the payment freeze, it dropped to just 15% in Q1 2023. To deal with this, they've amped up their personal loan offerings, which have now jumped to nearly 84% of their loan originations. Impressive turnaround, don't you think?

Profitability's looking more and more possible for SoFi. Given their promising progress, there's a lot of excitement building around what their Q3 earnings will look like. And if things play out like they did for Palantir Technologies after their first profitable quarter, we could see SoFi's stock take a serious leap.

Just keep an eye on the technical stuff too. With the stock currently testing resistance near $7.10, it might be wise to hold off on taking a new position until things cool down a bit.

As always, there are some risks. Rising interest rates could be a potential spoiler. Since SoFi's got a bank charter, they can make loans - but if rates go up, customers might be less willing to take on loans, which could put a damper on SoFi's loan originations.

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