With a sudden -5.4% drop to $14.09, SoFi Technologies has Wall Street wondering if its shares will keep moving past its target price of $14.45. With an average rating of hold, and analysts assigning target prices from 6.0 to 20.0 dollars per share, investors will be betting heavily on the Diversified Financial stock's next move.
To understand the market's outlook on the stock, we can look at SoFi Technologies's short interest: the proportion of the share float that is tied to short positions. Behind each short position is an investor who believes that the stock will decline in the future. Here, the stock's short interest is 13.2% which means the outlook is split.
When a stock is sold short, it means an investor has borrowed shares of the stock from their broker, and then sold them at the going market price. The investor hopes for the price to decline, so that they might buy those shares back at a lower price in the future. Once they do, they can return the borrowed shares to their broker, and keep the profit they made on the transaction.
We can make inferences about the market sentiment surrounding SoFi Technologies by analyzing its rate of institutional ownership. If institutions such as hedge funds and pension funds are the primary shareholders of a corporation, it most likely means that its shares are a good investment according to those institutions' analysts.
At 47.6%, the rate of institutional ownership is average, indicating that a sufficient number of institutions have concluded that it is a stable investment. Beware, however, that the rate of institutional ownership could also indicate an ongoing proxy battle or takeover attempt -- so you should also periodically check the news about a stock whose institutional ownership you are tracking.
To sum up, SoFi Technologies is probably the subject of mixed market sentiment because of an analyst consensus of some upside potential, a hold rating, an above average percentage of its shares sold short, and only a small number of institutional investors. At Market Inference, we believe that any investment decision should be preceded by an in-depth analysis of the company's fundamental values and a comparison with similar stocks.
Here's a snapshot of some important facts to keep in mind about SOFI:
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The stock has trailing 12 month earnings per share (EPS) of $0.43
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SoFi Technologies has a trailing 12 month Price to Earnings (P/E) ratio of 32.8 compared to the S&P 500 average of 29.3
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The company has a Price to Book (P/B) ratio of 2.33 in contrast to the S&P 500's average ratio of 4.74
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SoFi Technologies is a Finance company, and the sector average P/E and P/B ratios are 15.92 and 1.78 respectively
