SoFi stock price has come under intense selling pressure this year, even as the broad equities market has rallied. It has slumped by over 52%, erasing nearly $20 billion in value, with its market cap falling from $40 billion to $20 billion today. Still, there are signs that the stock has formed a double-bottom pattern that may trigger a rebound.
SoFi Stock Has Formed a Highly Bullish Pattern
Technicals are sending mixed signals about the future of the SoFi share price. On the negative side, it has remained below all moving averages. In trend-following analysis, an asset normally remains in a downward trend as long as it is below these moving averages.
The stock has also dropped below the 61.8% Fibonacci Retracement level. In most cases, bullish reversals normally happen when an asset drops to this crucial support level.
However, there are signs of light at the end of the tunnel. For one, the stock has formed a double-bottom pattern at $142 and a neckline at $20. A double-bottom signals that bears are afraid of placing short bets below that price. In most cases, it normally leads to dip-buying.
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The profit target is calculated by first finding its height. This is done by subtracting the double-bottom level from its neckline. In this case, the height is $5.27 (20.17-14.92). One then adds the figure with the neckline. This gives the SoFi stock a target of about $25, which is about 60% above the current level.
However, a drop below the double-bottom point at $14.9 will invalidate the bullish outlook and point to more downside, potentially to $10.
SoFi Technology Has Crashed Despite Strong Momentum
The most recent financial results showed that SoFi Technology is firing on all cylinders this year. This happened as the company continued launching new products, including its crypto solutions, international remittance service, stablecoin (SoFi USD), big business banking, and the SoFi Plus subscription.
Its goal is to expand SoFi Coach and relaunch its SoFi Technology Solutions. The latter will offer its enterprise clients top solutions like processing, banking services, and risk and fraud platforms.
These initiatives have helped to boost its revenues this year. Its total revenue jumped to over $1 billion in the first quarter, up by 41% from the same period last year. It now expects that its revenue will jump to $4.6 billion, while its net income will soar to $825 million from last year’s $421 million.
There are also signs that the company is not all that expensive, with its Rule-of-40 metric being 72%. This is based on its revenue growth of 41% and an EBITD margin of 31%.
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