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Financial services company SoFi Technologies (NASDAQ:SOFI) is looking to snap its seven-day winning streak, trading ~3.57% below its previous close at $7.56, after the government announced forgiving $1.2B in student loans.
The student loans provider posted consecutive sessions of gain after the company’s financial technology platform Galileo updated on its wire transfer capabilities for fintechs in a July 9 statement.
The stock added 21.49% over the course of the last seven trading days, finishing 1.16% above its previous close at $7.84 on Wednesday, July 17.
However, the trend was reversed after the Biden administration announced today that it is forgiving $1.2B in student loans for an additional 35,000 public service workers through its Public Service Loan Forgiveness program.
Other student loan providers Navient and Nelnet were also impacted by the announcement.
SOFI has declined by ~23% year-to-date, and is trading 15% above its 20-day simple moving average.
Short interest was at an above-average 18.51% of the shares float as of June-end, representing 187M shares sold short.
“In the last two consecutive quarters, SoFi has shown improvement in their financials, achieving GAAP profitability as promised by management last fall. Promises made, promises kept,” said Seeking Alpha analyst Noah’s Arc Capital Management.
“Despite this positive shift, shares continue to face downward pressure. This is likely caused by speculation over potential loan defaults and deteriorating credit quality within SoFi’s asset portfolio. I believe this speculation is incorrect and misguided,” the author said.
SA analysts grade the stock as Buy on average.
Meanwhile, the sell-side analysts and the Quant Rating system assign SOFI a Hold rating.
Quant gives the stock a C for Valuation, A for Growth, F for Profitability, D- for Momentum and B for Revisions, with an overall score of 3.14 on a scale of 5.
SoFi was on the list of the “Top Sell” ideas by Oppenheimer Asset Management.
