Stocks to buy

Will neo-banking firm SoFi Technologies (NASDAQ:SOFI) be the comeback story of 2023? SOFI stock has several potential turnaround drivers that last year’s downtrodden investors can look forward to this year.

As you’re surely aware, last year’s inflation woes and recession fears prompted a selloff in the stock market. SoFi’s investors were hit with staggering losses, but the signs points to a possible turnaround in progress. Here, then, are three reasons to consider a long position in SoFi Technologies right now.

SoFi Technologies’ Financials Are Improving

In most quarters, SoFi Technologies has exceeded Wall Street’s earnings per share (EPS) forecasts. Yet, it’s been disappointing to see SoFi post net earnings losses quarter after quarter.

Here’s some encouraging news, though. SoFi Technologies’ fourth-quarter 2022 $40 million GAAP net earnings loss represents a 64% improvement over the prior-year quarter’s $111 million net loss.

Also, SoFi’s full-year 2022 net loss showed a 34% improvement compared to 2021’s net loss. The point is SoFi Technologies is demonstrating improvement in its financials and might actually close its profitability gap in the near future.

SoFi Is a ‘Legit’ Bank with a Banking Charter

SoFi Technologies appeals to younger generations of savers and investors. It’s a disruptor that represents the future of modern banking.

However, skeptics and traditionalists might question whether SoFi is a “legitimate” bank that’s capable of competing with established financial institutions. Those doubts can be put to rest, though, as SoFi Technologies is currently officially recognized as a bona fide bank with a national bank charter.

CEO Anthony Noto explained why this is so important. The national bank charter means SoFi Technologies can offer “more competitive interest rates and provide our members with high-yielding interest in checking and savings.” Plus, it assures the customers that SoFi will “uphold a high bar of regulatory standards and compliance.”

More Accommodative Monetary Policy Will Benefit SOFI Stock Investors

Since SoFi Technologies is a legitimate bank, it will be subject to the policy shifts of the nation’s central bank, the U.S. Federal Reserve. Throughout 2022, the Fed enacted a series of interest rate hikes, including four consecutive “jumbo” hikes of 75 basis points each.

This wasn’t helpful to a lender like SoFi Technologies, as high interest rates tend to crimp borrowing and lending activity. The good news, though, is the Fed seems to be easing up, as the previous two interest rate hikes were 50 and then 25 basis points.

Moreover, Federal Reserve Chairman Jerome Powell’s recent press conference indicated a more accommodative tone. Powell mentioned “disinflation” multiple times, and the stock market responded with heavy buying activity. This is certainly bullish for SOFI stock, so feel free to consider a long position today. A potentially less hawkish Fed, along with SoFi Technologies’ improving financials, should greatly benefit the company’s investors this year.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.