Is SoFi Technologies Stock a Bargain After Its Big Drop, or a Falling Knife?
Yahoo Finance ·
After a couple of years of beating the market, SoFi Technologies ( SOFI -1.14% ) has lost its momentum. The fintech specialist's shares have declined 39% since January. What's more, there are still potential risks ahead that could send the stock even lower. Should investors buy SoFi's shares at current levels, or is it best to stay far away from the company right now? SoFi encountered several headwinds this year. Here are three of them. First, the fintech leader was the target of a short-seller report that made alarming allegations. The author of the report, Muddy Waters, an activist short-selling firm, claimed, among many other things, that SoFi inflated its profitability through questionable accounting practices, including overstated loan values. Second, SoFi's financial results and guidance haven't been as strong as the market anticipated. Third, SoFi appears to be overvalued, even after the stock's decline this year. The company's shares are trading at 28.1x forward earnings, versus an average of 15.2x for financial stocks . Given these headwinds, can SoFi recover?
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