At the time of recording this video I have lost over $12,000 on sofi stock and with the
share price continuing to plummet, my perspective on this investment has definitely a changed
a bit.
So today let's talk about my plan going forward with investing in SoFi.
Alright let's report into it.
What is going on everyone I hope you are all having a fantastic day…or at least a better
day than I am because I have lost a lot of money from SoFi.
To bring you up to speed really fast on June 7th of 2021 I purchased $1000 at $21.57 per
share in this video and talked about how the IPO volatility would work its way out and
how I felt that SoFi stock would then head to the moon.
Then later that year on October 20th of 2021 I made a follow up video explaining how I
had been averaging down as the price fluctuated between 13 to $20 per share and had increased
my total investment to around $10,000 thinking that there was no chance the stock price could
fall much further…
spoiler alert I was wrong again.
Since the start of 2022 it has been nothing but bad news for SoFi and even after making
a last ditch effort on March 21st of 2022 where I purchased an additional $15,000 of
SoFi stock at $8.14 per share which brought my average price per share to $12.52, the
stock has continued to plummet and at the time of recording this video on April 22nd
of 2022, SoFi stock sits around just $6.50 per share meaning on my total investment of
$25,000 i have lost over 12,000 of that.
Now I'm used to taking some risks with investments with a firm understanding that they are not
all going to work out and that's why it is so important that you never invest with money
that you can't afford to lose.
Additionally, while I will definitely admit that a $25,000 investment in a single company
is significantly larger than any other single stock I own, this is still a small percentage
of my total portfolio but the real gut punch here is the fact that I believe in SoFi so
much hence the reason why I talk about it a lot on this channel yet despite all of the
positive catalysts, good news and awesome new features, the price just continues to
sink lower and lower.
Now my videos on this topic have not aged well in the past so depending on when you're
watching this you might be laughing at me one way or another once again.
And despite my high level of experience for my age in terms of risky investments and a
good understanding of how to remove the emotion from investing, this one hurts a lot.
So what can we learn from all of this and of course where in the world is SoFi headed
in the future which is honestly hilarious for me to say because clearly I've demonstrated
that I have no idea where it is headed and you’d probably be better off doing the exact
opposite.
That aside, in previous videos on this topic we've talked about the many compounding catalysts
that have not exactly been good news for SoFi.
Obviously the market as a whole has seen a pretty significant pullback in recent months
caused by international conflict and uncertainty as a result, continued supply chain issues,
and a number of economic factors that have been shaking our economy for a number of years
at this point.
But we've also talked about a lot of the positive catalysts that continued to motivate me to
double down and invest more into this company that I believe in so much.
We talked about how SoFi received their national banking charter and launched some new products
as a result of that, we talked about how they continued to meet and surpass their earnings
projections as well as new member signups.
And we even took a look at how SoFi’s very own CEO started investing hundreds of thosands
of dollars into SoFi himself just a few months ago which in my eyes was a good sign that
the price could be nearing a bottom and the company was headed in a positive direction
in the long term.
But again we have to ask the question…if all of that is such good news then what is
going on with SoFi stock.
Well, all of those factors that I just mentioned definitely still play a factor but just a
few weeks ago, the current administration announced the continued moratorium on student
loans which as we talked about before is not exactly a good thing for SoFi’s bottom line.
If you currently have federal student loans then the continuation of this moratorium means
that you do not currently have to make payments and the interest on those loans is zero percent.
And what that means as a consumer is there's really no point in you refinancing those federal
loans because you're not going to beat zero percent terms with no payment necessary for
the foreseeable future.
But from SoFi’s perspective, that means that new customers are not refinancing their
loans which is a decent chunk of SoFi’s business and naturally that has an impact
on their bottom line.
But according to SoFi’s most recent earnings reports, their lending services actually no
longer make up a majority of their overall customers so while the continued moratorium
on student loans is definitely still going to play a small role in their bottom line
and share price, clearly there must be something else going on here.
Well despite the fact that those lending services don't make up a majority of SoFi’s business
anymore from a new member signups perspective, it is a huge chunk of their revenue since
they earn significantly more from collecting interest on student loan payments than they
do from other financial products that outside of earning fees on debit and credit card transactions,
these products come at no cost to the end user.
Additionally, after the student learn moratorium was extended until August of 2022, company
management actually cut their earnings outlook for the remainder of the year and the stock
has continued to take a beating since then.
But even after that adjustment, their adjusted net revenue and EBITDA which is earnings before
income tax depreciation and amortization still sits at $1.47 billion and 100 million respectively
for the year.
For those of you that are not financial analysis nerds which is totally understandable, those
numbers are insane when compared to the stock performance over the past several months.
Despite the fact that it is down over 70% from its previous highs and the fact that
the student loan repayments continue to be kicked down the road, SoFi is expecting their
margins will double and projects that revenue will be up 45% from the previous year.
These numbers sound great on paper but at the end of the day, despite the fact that
they have a positive EBITDA SoFi is not making money and is definitely going through some
serious growing pains at the moment which coupled with the unfortunate market conditions
and other factors added it on top of all of that, things have been and could continue
to be pretty rough from a stock price perspective.
So with all of that in mind, what is my plan going forward as someone who has already lost
a ton of money from previous poor decision making on this stock.
Well I'll tell you right now that I'm definitely not throwing another $15,000 at this thing.
It doesn't mean that I won't try to lower my average price per share in the future but
I need to let some of this market volatility cool off and see short sellers take profits
before I would even consider putting another penny into an already bleeding investment.
To be completely honest with you, I have already broken a ton of my personal investing rules
on this one because of the fact that I do feel emotionally invested which is not a good
thing and I do really believe in this company.
Usually if a single investment were to fall more than 10% in such a short period of time
I would throw in the towel and move on to the next investment.
But here I am approaching the 50% loss mark having dollar cost averaged as the price went
down which is another thing that I am firmly against yet I'm still not ready to throw in
the towel.
Maybe I'm insane maybe I'm too emotionally invested in this one I don't know but regardless
of what happens next, it's all going to be on display for all of you which should hopefully
make for some good entertainment at the very least.
So not that this should mean anything to you because I know absolutely nothing based on
my previous track record but here's my take on where this could all be headed.
In the short term, I do think that things will continue to be painful for SoFi.
Clearly there are a lot of variables and unfortunate political and economic circumstances impacting
SoFi at the moment and if I'm being completely honest, I would expect that we reach August
and see the student loan moratorium get kicked down the road at least one more time through
the midterm election because while it's up for debate whether or not that is economically
necessary at this point, most would agree that continuing to push off peoples interest
and student loan payments might just help you out during an election that could decide
how the remainder of your presidency goes.
Politically I really don't care and that's not what this channel is about but it's important
to understand the political motivations that can and will continue to impact the investments
that you and I are making.
Now in the long term like 5 years or more, I am absolutely 100% still incredibly bullish
on SoFi and that is why I will absolutely not be throwing in the towel.
If SoFi goes bankrupt then I am proud to say that I am going down with the ship and while
that is horrible financial acumen, I've already broken all of my investing rules so why not
stick to the bad habits for the remainder of this very bumpy ride.
And again if things start to settle out and perhaps the price starts to turn the corner
and break out of its current downtrend, I'm absolutely open to the idea of continuing
to lower my average price per share in hopes that I could potentially turn this into a
pretty huge profit if the share price were to return to anything close to its previous
highs.
But as always that is just my opinion on this and clearly I have been wrong before so I'd
love to know what you think of SoFi stock down in the comments section below and what
your plan is going forward with this pretty unpredictable investment.
Be sure to check out some of my favorite financial tools down in the description below many of
which will give you some free cash when you sign up if you do want to help support me
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like this in the future.
Thank you so much for your time I really do appreciate it so much take it easy and I'll
see you in the next one!