Key Takeaways:
- Three different Wall Street firms downgraded SoFi Technologies Inc. in their analysis.
- SOFI stock price plummeted as a result of the news.
PATNA (CoinChapter.com) — The recent dream run of SoFi Technologies Inc.’s stock price ended on June 16. SOFI stock price plummeted after three separate firms downgraded the firm’s ratings, leading to panic selling of SoFi Technologies stocks.
Independent investment bank Oppenheimer first downgraded SoFi stock. Dominick Gabriele, an analyst at Oppenheimer, dropped the SoFi Technologies shares from a “outperform” rating to a “perform” rating.
This downgrade is purely on valuation after what we suspect is a significant short squeeze on a likely bear thesis based on account changes away from fair value accounting, inflated assumptions by management, capital capacity and worries about credit quality.
Oppenheimer stated in a note to clients.
Afterward, two other Wall Street firms dropped the ratings of the fintech firm. Bank Of America analysts downgraded the firm’s rating from ‘buy’ to ‘neutral.’
Moreover, Piper Sandler analyst Kevin Barke dropped the SoFi Technologies Inc. stock’s rating from ‘Overweight’ to ‘Neutral’ with a price target of $8.00 (from $6.50). The analyst noted that the downgrade was primarily due to valuation.
However, the Piper analyst noted that the SOFI stock would be a “long-term winner.”
SoFi Technologies Inc.’s Student Loan Problems
SoFi Technologies is an American online personal finance company that provides various financial services, including student loans. The SOFI stock prices had rallied following optimism surrounding the end of the federal student loan moratorium.
Delinquency issues have plagued SoFi Technologies, with the firm recording $8.25 million that were delinquent by more than 90 days in FQ1 2023. With the Fed pivot not in sight, headwinds for the firms continue to get stronger.
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Additionally, data suggests that most Americans use credit cards for most purchases. As such, many borrowers could likely opt for (or refinance existing) loans for longer repayment terms and lower monthly payments.
However, increased repayment terms could spike delinquency rates, providing headwinds for SoFi Technologies Inc. stock prices.
SOFI Stock Price Ends Month-Long Rally
News of the downgrade wreaked havoc on SOFI stock price, with SoFi Technologies shares plummeting more than 11.5% to form a daily low near $8.5 on June 16. The decline ended a 33-day rally that saw SOFI shares price spile 130% from May 15’s low of $4.45.
If the downtrend continues, SOFI stock price might drop to support near $8. Moreover, breaching the immediate support level could result in the SoFi price testing its 50-day EMA (purple wave) support near $6.7 before recovering.
Conversely, if bulls launch an offensive, a rally would likely face resistance near $9.4. However, breaking and consolidating above immediate resistance might help SOFI price reach resistance near $10.5 before downside corrections pare gains.
Meanwhile, the RSI for SOFI re-entered the neutral region, clocking at 65.8 on the daily charts after being overbought since June 1.
