SoFi Technologies is rallying on its earnings report, but does that make it a buy?
Shares of SoFi Technologies (SOFI) – Get SoFi Technologies Inc Report were jumping in Tuesday’s after-hours session, up about 23%. Recently, though, SoFi stock traded up around 6%.
The Wednesday move comes after the San Francisco financial-services provider posted better-than-expected earnings on Tuesday after the close.
The fade shouldn’t be a surprise.
First, particularly for growth stocks these days, the default reaction — even for good reports — has been to sell the news.
Second, the stock opened near significant resistance, which we’ll detail below.
As for the earnings, the results were solid. Earnings and revenue results beat expectations, as did guidance.
SoFi shares were trying to build a base in mid-February, but the stock price couldn’t hold up as selling pressure increased.
The company’s $1.1 billion all-stock acquisition of Technisys in late February didn’t help matters, with the shares falling more than 25% from peak to trough following the announcement.
Now what?
Trading SoFi Stock
Daily chart of SoFi stock.
Chart courtesy of TrendSpider.com
Earlier I referenced “significant resistance” near where SoFi stock opened for trading this morning.
On the chart, that comes from the declining 50-day moving average — a common technical failing point for growth stocks right now — as well as the underside of prior uptrend support (blue line).
But it also comes at the $13 to $13.20 zone, which was a significant low in 2021 and support earlier this year. Once it failed as support, it became stout resistance.
So that was pretty much the basis for the stock; either clear this trifecta of resistance or risk fading to the downside.
Now that the stock has faded, we must see where support comes into play. So far, the bulls are keeping SoFi stock bid above the 10-day and 21-day moving averages.
From here, I’d like to see the stock clear the 50-day. If it can do that, I think $16 to $16.50 is a real possibility. That’s where SoFi stock will find prior resistance and the declining 200-day.
On the downside, watch for a break of the short-term moving averages. That could put $10 or lower back in play.
