The headlines are still buzzing about the implosion of SVB Financial (NASDAQ:SIVB) and its subsidiary, Silicon Valley Bank. Does this mean investors should steer clear of app-based bank SoFi Technologies (NASDAQ:SOFI) stock?
Despite the market’s anxiety about the banking sector, at least one insider is buying SOFI stock. You can choose to keep SoFi on your radar as well and even think about starting a share position.
It’s interesting, how the media can focus on a certain word from time to time. Lately, the word has been “contagion,” regarding the failure of some local and regional banks.
Could SoFi Technologies be the next victim of this apparent “contagion”? Anything’s possible, so be aware of the risks that investing in the financial sector can involve. Yet, there’s no need to generalize as SoFi Technologies isn’t the same as Silicon Valley Bank and other problematic banks.
SoFi Technologies Isn’t Likely to Fail
No one is saying that SoFi Technologies is a “perfect” company, if such a thing even exists. SOFI stock gets a “B” rating instead of an “A” rating because, we must admit, the company isn’t currently profitable. This might be a deal-breaker for some prospective investors.
On the other hand, SoFi’s $40 million GAAP net earnings loss from the fourth quarter of 2022 shows a 64% improvement versus the $111 million net loss of the prior-year quarter. Although SoFi Technologies posted a full-year 2022 net earnings loss, it shows a 34% improvement compared to 2021’s net loss.
Also, while SVB Financial is filing for bankruptcy protection, SoFi Technologies appears to be doing fine at the moment. That’s because SoFi didn’t over-leverage itself with government bonds, cryptocurrency, or any other asset type. So, you probably won’t have to worry about “contagion” spreading to SoFi Technologies soon.
CEO Continues to Buy SOFI Stock
Does insider buying mean that you should also buy a stock? The decision is yours, but it’s certainly encouraging to see SoFi Technologies CEO Anthony Noto continue to hoard shares of his company.
Specifically, Noto recently bought 45,000 shares of SOFI stock, spending $240,000. He had previously purchased 180,000 SoFi shares for around $995,000 on March 10.
Across two buying sprees in March, Noto purchased an eye-popping $1.24 million worth of SoFi Technologies shares. If action speaks louder than words, then the chief executive is practically shouting at this point. Clearly, Noto believes in his company’s future and isn’t obsessing too much over “contagion” risk.
What You Can Do Now
SoFi Technologies needs to continue working towards profitability over the coming quarters. It’s not a perfect company now, but at least SoFi is improving its bottom line and didn’t over-leverage into any asset class.
Therefore, investors might consider joining Noto and purchasing some SOFI stock shares. Of course, you don’t have to buy as many shares as the CEO did. However, you can still give SoFi Technologies a chance with a small investment if you’d like, or at least keep the company on your watch list.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.