Hardly anyone, including the company’s fans, would call California-based neo-banking firm SoFi Technologies (NASDAQ:SOFI) a winner in 2022. SOFI stock lost a great deal of value that year, but this could be a setup for a multi-bagger recovery. Indeed, at least one Wall Street expert sees a favorable reward-to-risk ratio for SoFi Technologies’ investors. So, are you ready to take a chance and target $10 in 2023?
If you take a long position, you’ll be in good company. As you might have heard already, CEO Anthony Noto purchased roughly 1.13 million SoFi Technologies shares from Dec. 9 through Dec. 13, 2022. That’s a positive sign, you must admit.
Of course, it’s not a guarantee of success. Still, there are other reasons to stay the course with SoFi Technologies, so get ready for a bumpy but potentially profitable ride.
Worst-Case Scenarios Are Priced Into SOFI Stock
The Federal Reserve has already ratcheted up interest rates. President Joe Biden’s administration extended the pause on required federal student loan repayments. What else could possibly go wrong for SoFi Technologies?
Financial traders seem to have priced all of this bad news, and then some, into the SoFi Technologies share price. Believe it or not, SOFI stock fell from $15 to less than $5 in 2022.
Many people say, “Buy low, sell high,” but are you willing to put this into practice? Bear in mind, the Federal Reserve won’t raise interest rates forever. As soon as the market gets a hint of an imminent pause or pivot, beaten-down SoFi Technologies investors could stage a massive relief rally.
Besides, the student loan moratorium isn’t meant to last forever. Per the Biden administration’s statement, “If the program has not been implemented and the litigation has not been resolved by June 30, 2023 — payments will resume 60 days after that.”
SoFi Technologies Gets a Nod from a Wall Street Analyst
It’s also nice to know that Noto isn’t the only individual with a favorable view of SoFi Technologies. In fact, Mizuho analyst Dan Dolev recently offered some encouraging words for the fintech firm.
Dolev acknowledged that SoFi Technologies “is a regulated bank,” which is significant because it means that the company doesn’t need to rely on third-party financial institutions to provide deposit services and issue loans. This was all made possible when SoFi Technologies completed its purchase of Golden Pacific Bancorp last year.
Regarding macro-level issues, Dolev feels that negative sentiment on student lending is “kind of behind us at this point,” and that “mortgages are going to come back at some point.” Again, there could be a relief rally after financial traders stop pricing in worst-case scenarios.
All in all, Dolev concludes “There’s just more opportunity than risk,” and “the downside risk is extremely minimal because it’s trading sort of bare bones right now.” This certainly sounds like a value investor’s viewpoint, and SOFI stock just might turn out to be a value seeker’s gem in 2023.
It’s Time to Be Cautiously Optimistic With SOFI Stock
The SoFi Technologies share price started 2022 at around $15, so a target price of $10 isn’t too much to ask for. That said, it’s important for investors to mitigate their risk, even if they envision a favorable reward-to-risk scenario.
Therefore, any long positions in SOFI stock should be small. Still, there’s huge upside potential in the coming year, especially if/when a relief rally finally comes.
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 InvestorPlace.com Publishing Guidelines.