It’s been a tough year for the neo-banking society Sofi Technologies (NASDAQ:SOFI), to say the least. Macroeconomic conditions have made it nearly impossible for SOFI stock to hold up in 2022. Still, the company has made progress in key areas. The most sensible course of action now is to wait for the stock price to reach a significant level – then investors can have more confidence in SoFi Technologies.
$10 will be a crucial tipping point for SOFI stocks
Suffice to say, the damage to SOFI stock was extensive. Buyers made not one, but three attempts to break through $25 in 2021, and they failed each time.
2022 hasn’t been any easier for SoFi Technologies and for fintech companies in general. The Federal Reserve has raised interest rates several times, discouraging borrowing and lending activity. Additionally, high inflation has made it difficult for businesses and individuals to save and invest money.
Consequently, SOFI stock has fallen to the previously unimaginable $5 level. Sure, there may be a bargain here, but timing is critically important for successful investors. You want to see signs of life: an uptrend in the stock and a breakout of the psychologically significant $10 level, accompanied by significant trading volume.
You’ll also want to keep a close eye on SoFi’s finances, not just the stock price performance. But what should investors be looking for?
Take note of SoFi’s membership and revenue growth
On the one hand, investors should expect SoFi Technologies to continue to grow its revenue and membership base. In these areas, the business has thrived despite the aforementioned macroeconomic obstacles.
Since the third quarter of 2019, SoFi has managed to grow its membership every quarter. In the third quarter of 2022 alone, the company added 424,000 new members, bringing the total to 4.7 million members.
Has growth in SoFi membership translated into increased revenue? There may indeed be a correlation, as SoFi Technologies grew its third-quarter 2022 revenue 56% year-over-year to nearly $424 million.
Therefore, the idea here is not to completely abandon SoFi Technologies. On the contrary, you can believe in the long-term business, but just choose your entry price carefully.
While you’re at it, keep an eye out for SoFi’s results. Unfortunately, the company is currently not profitable. However, it secured a banking charter this year, which should help SoFi earn its customers’ trust and eventually a profitable profile.
Wait patiently, then buy SOFI shares
You can love SoFi Technologies without jumping into an investment in the company just yet. There’s no need to be in a rush, so feel free to pick a purchase price and stick to your plan.
$10 is important because it is in double-digit territory and because it provides a buffer from penny stock status (below $5). So, keep an eye on SoFi Technologies’ membership, revenue, and revenue levels. At the same time, watch for a breakout of the $10 level – then, if you’re ready, consider buying SOFI shares.
As of the date of publication, David Moadel had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.