Downgraded SoFi from Buy to Hold Due to Stretched Valuation

3 months ago

Parkev Tatevosian, CFA

"However, I think SoFi stock has gotten a little bit ahead of itself in terms of the stock price increase compared to the increase in fundamental performance of the business. You see here, my proprietary discounted cash flow valuation values this stock at around $19 a share, but the current market price is over $30 a share, $31 a share. That's why a couple of weeks ago, I downgraded SoFi stock from a buy to a hold. I'm still bullish on the long-term prospects of this company. However, at the current market prices, I think there are better risk versus reward available in the market for other companies right now."

The analyst explains that despite long-term bullish prospects, SoFi's current valuation is too stretched relative to its fundamentals, prompting a downgrade from a buy to a hold. He suggests that the risk/reward profile is less attractive at current price levels, and that investors might find better opportunities elsewhere in the near term.

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