![]() ![]() Moreover, PayPal's recent execution has been below par, therefore afflicting its FinTech peers further. Otherwise, the FinTech players will have to demonstrate robust execution in the light of difficult comps to recover the market's confidence. Therefore, the market has understandably punished the FinTech space until we completely lap the difficult 2020/21 comps. It will be tricky if the leader in the space is facing tough headwinds from pandemic comps, and relatively weak execution, given its attached growth premium. All three stocks have also fallen well below their respective 2021 highs, including the leader PYPL. SoFi stock & peers' valuations 1Y trend (TIKR)įurthermore, we can also observe the value compressions for SOFI and its FinTech peers listed above Block, Inc. Therefore, FinTech investors have had a really tough time recently as the market rotated out of growth into traditional financial stocks. The FINX registered a 1Y return of -30.9%, compared to the XLF's 32.1%. Readers can glean from the above chart to observe the distinct bifurcation between the Global X FinTech ETF ( FINX) and the SPDR Financial ETF ( XLF). SPDR Financial ETF 1Y performance (koyfin) If you are new to SoFi, you can refer to our previous article for a discussion on its underlying thesis. Therefore, it's critical not to over-expose your portfolios to the stock. Notably, investors should consider SoFi stock as a speculative play. Even though it's still unprofitable, we think it can continue gaining leverage, with a clear path to profitability. Nevertheless, we believe that SOFI has tremendous potential as a disruptive FinTech play over the long run. However, investors quickly digested its momentum, and its stock remained near its recent lows. The company's recent bank charter approval also saw a momentary spike in its stock price. Therefore, we are not surprised that SOFI stock has also been battered, as investors parse the quality of its growth. Coupled with their solidly profitable bottom lines, these legacy banks look primed to thrive in a rising interest rate environment compared to stocks like SOFI. It's also in stark contrast to their leading legacy peers (the ones SoFi aims to disrupt). The macro-environment has undoubtedly not been welcoming for FinTech stocks like SOFI. ( NASDAQ: SOFI) stock continues to come under pressure in 2022 as it continues to slide towards lower lows. Drew Angerer/Getty Images News Investment Thesis ![]()
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