Monday was largely about trading upbeat stock splits news on Wall Street. But in a market made up of stocks, SoFi Technologies’ (NASDAQ:SOFI) SOFI stock continues to be an ignored opportunity for investors to watch for a good buy-in point.
At long last, the first of a few influential stock splits have commenced with Amazon’s (NASDAQ:AMZN) 20-for-1 move. On the back of the price change, Amazon stock investors sent shares higher by about 2% to a more accessible price tag of about $125.
Nearby splits for Tesla (NASDAQ:TSLA), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Shopify (NYSE:SHOP) also enjoyed relative and absolute strength on the session. Excited investors were in no mood for fintech SOFI stock, with shares slipping 1.7% to buck the broader market.
Today let’s review some reasons why this year’s discount on SOFI stock may not make headlines, but may help with a solid purchase soon.
| SOFI | SoFi Technologies’ | $6.70 |
SOFI’s Insider Commitment
A stock split can make shares superficially appealing to smaller buyers. By contrast, insider purchases are a less arbitrary indicator of real value. And a wave of buying by SoFi’s CEO Anthony Noto’s appears bullish for SOFI stock.
Executives sell shares all the time, and most often for reasons unrelated to the business itself. College for the twins. A new house. Simply too many eggs in one basket. You get the point. Arguably though, there’s only one reason to buy stock on the open market. And SOFI’s CEO has been busy picking up shares in SoFi shares in spite of the stock losing about 57% this year.
On Monday, he bought 21,750 shares at an average price around $6.90. Last week saw 21,215 shares acquired by Noto at an average price of $7.07. Less than two weeks ago, just over 37,000 shares were picked up for $6.72. He’s bought shares more than 12 times in 2022 so far, increasing his cumulative SOFI stock position to nearly 3.4 million shares owned.
SOFI Stock’s Mixed Messages
Source: Charts by TradingView
On first glance, the insider buying is nice to see, especially as a good chunk of those shares purchased followed the fintech’s overall solid but panned quarterly results in early May. Fairly though, it should be noted the purchases amounts to a smallish 4% position increase in ownership.
It raises the question though — is Noto’s buying on the up and up or akin to throwing in a few poker chips to help with a much larger pot?
Technically, if investors are upbeat about SoFi Technologies’ growing digital-first financial services, rather than fearing a student debt moratorium that’s helped bears hold SOFI stock hostage this year, the seeds for a bottom are being planted.
Shares of SoFi are consolidating for a fourth week after rallying through downtrend resistance which began last November. With the price action after SOFI stock’s bearish earnings misstep leading to new lows, a bullish trend change could be underway.
However, SOFI’s weekly stochastics indicator is also signaling an overbought and bearish opportunity that could make winners out of the stock’s 19% short interest, despite the initial failure of SoFi’s downtrend line.
SOFI Stock Takeaway
Despite insider purchases, the possibility for a new bullish cycle and strong operating results for its size, I don’t see SOFI stock as a buy right here, right now.
Investors should watch for a weekly reversal pattern in SOFI to be confirmed by price action and for stochastics to be in a more productive position for buyers. Without the two in place, the risk of a full-blown test of SoFi’s all-time-low can’t be dismissed.
Should the bullish conditions be met, I’d agreeably point investors in the direction of a collar or married put strategy to help with a more methodical stock campaign capable of profiting in both bull and bear markets.
On the date of publication, Chris Tyler holds long positions in SoFi Technologies (SOFI) (either directly or indirectly), but no other positions in securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.