SoFi stock price retreated by over 6% on Friday after the fintech giant announced a huge dilutive capital raise to fund its growth. It dropped to a low of $27.50, down modestly from the year-to-date high of $32.6. Still, some potential catalysts may boost the stock in the coming weeks.
SoFi Stock Price Dipped After New Cash Raise
SoFi, a top fintech company, surprised the market by announcing a new $1.5 billion capital raise, which will dilute existing shareholders. This raise came about a year after the company announced a similar raise that pushed its outstanding shares up to 1.2 billion.
The fundraising was notable, as the last financial results showed its tier-1 ratio was over 20%, much higher than those of other companies like JPMorgan and Bank of America.
Still, the company’s fundamentals are strong, helped by the ongoing customer growth trajectory. Its revenue has soared from $565 million in 2021 to $3.2 billion in the trailing twelve months, and analysts expect it to reach $3.5 billion this year and $4.45 billion next year.
Most importantly, the company has become highly profitable, with its net income rising from $498 million in 2024 to $640 million in the TTM. This growth will likely continue as the company expands its business, including the upcoming launch of its crypto trading solutions.
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Launching crypto solutions will make it a real financial supermarket, offering most of the products customers use in their daily activities. These products include its lending, insurance, mortgages, credit scores, student loan refinancing, and credit cards. It also runs a subscription service that offers users additional perks.
Still, the only risk that SoFi faces is that it is relatively overvalued. Its current price of $27 is higher than the average analyst estimate of $26. It also trades at a forward P/E ratio of 80, much higher than the sector median of 11.
SoFi Technologies Price Technical Analysis
The daily timeframe chart shows that the SoFi share price has jumped from its year-to-date low of $8.70 in April to its current level of $27.65.
It has stalled recently and moved in an ascending channel, while remaining above the 50-day and 100-day Exponential Moving Averages (EMAs). A closer look shows that it remains above the Ichimoku cloud indicator.
The stock has also formed a bullish flag pattern, consisting of a vertical line and a channel. Therefore, the most likely scenario is where the stock rebounds as concerns about its dilution wane.
If this happens, the next key resistance level to watch is $32.6, its highest level this year, which is ~17% above the current level. A move above that level will signal further gains, potentially to the resistance at $40.
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