Stock Market

Why SoFi Technologies Stock Is Not Out of the Woods Yet

Fintech firm SoFi Technologies (NASDAQ:SOFI) hasn’t been a darling of the market for a long time. Will 2023 be the year SOFI stock stages an exciting comeback? Don’t get your hopes up, as an update from the U.S. government signals potential problems for SoFi Technologies. Not only that, but someone within the company apparently has a not-too-optimistic outlook on America’s economy, and that’s probably not a good sign for SoFi Technologies.

Investors of SoFi Technologies are on the lookout for signs that they’re “out of the woods,” it seems. It’s a constant battle to keep the share price above $5, which some folks consider to be the penny-stock dividing line.

If there are signs that SoFi Technologies will continue to struggle this year, you don’t have to buy shares and expose yourself to the company’s problems. Until there are compelling reasons to believe otherwise, don’t jump to any conclusions that SoFi Technologies is actually out of the woods.

Student Loan Repayment Pause Saga Could Continue for a Long Time

No one is actually suggesting that President Joe Biden has a particular problem with SoFi Technologies. However, a recent move by the White House could cause problems for SoFi, and prospective investors should pay attention to this.

As you may recall, the Biden administration extended the moratorium on federal student loan repayment requirements in November. Consequently, that student loan repayment pause could extend 60 days past June 30, 2023.

This poses a problem for SoFi Technologies, as the company generates revenue from refinancing student loans. In a recent update, the Biden administration approved more than 16 million people for student loan forgiveness.

We’re not just talking about a repayment requirement pause but outright forgiveness. This saga isn’t over yet, as the White House’s order could be contested in U.S. courts. Still, it’s a sign that SoFi Technologies may encounter prolonged challenges to a major revenue source.

SOFI Stock Traders Should Consider a Strategist’s Warning

Sometimes, you may hear downbeat predictions about the U.S. economy in 2023. What if you heard one from a high-ranking individual at SoFi Technologies? How would that make you feel about buying SOFI stock today?

Reportedly, Liz Young, head of investment strategy at SoFi Technologies, considers recent U.S. corporate earnings to be “not really all that impressive.” Even more ominously, Young warned, “I’m still cautious. I still think that the economic data and the blowback from this tightening cycle have not been seen entirely.”

Bear in mind, this is from an insider at SoFi. In addition, Young sees a “high probability that things can likely get worse again before they get better.” This, clearly, doesn’t bode well for SoFi Technologies — which, as a financial company, is especially sensitive to macroeconomic conditions.

What You Can Do Now

It’s probably not a bad idea to heed Young’s warning and apply it to SOFI stock. Can you really be confident in SoFi Technologies’ future, if “things can likely get worse again before they get better”?

Moreover, prospective shareholders should think about the implications of the student loan repayment moratorium, along with the student loan forgiveness saga. Given these considerations, it’s reasonable to refrain from investing in SoFi Technologies for the time being.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.