Investing

Prediction: SoFi Technologies (SOFI) Will Hit $22 Under a Trump Presidency

Rich Duprey

Published: November 7, 2024 2:01 pm

Donald Trump’s decisive presidential victory and Republican control of both houses of congress sent the markets soaring yesterday. The promise of regulatory and corporate tax reform brightened the mood of investors who see numerous industries benefiting from the promised business-friendly environment.

One of those that could see substantial gains is the fintech industry. In particular, SoFi Technologies (NASDAQ:SOFI) could enjoy significant share price appreciation during Trump’s presidency with its stock doubling in value and hitting $22 per share.

24/7 Wall St. Insights:

• Donald Trump’s electoral victory promises a better regulatory and corporate tax environment that should benefit all companies, but especially those in the financial technology sector.
• SoFi Technologies (SOFI) was particularly impacted by President Biden’s student loan forgiveness programs, which Trump has harshly criticized. It suggests they will soon come to an end.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Improving corporate regulation and taxes

Financial services stocks of all stripes are seen as benefiting from the once-and-future president’s administration. Trump has promised to lower corporate taxes and press for deregulating the banking industry. The corporate tax rate will be cut to as low as 15% for companies that produce goods and services in the U.S. from its current level, and he promised to eliminate 10 regulations for every new one created.

Reform of the Consumer Financial Protection Bureau (CFPB) could also give a boost to the financial technology sector and to SoFi Technologies in particular. Proposed rules on customer data collection and underwriting standards would be especially onerous for fintechs and banks have lobbied for them to be scrapped. 

The regulatory body also has been investigating the payments industry, but the biggest pain for SoFi was the Biden administration’s student loan forgiveness programs. While he was thwarted by the Supreme Court in expanding his forgiveness efforts, Biden still canceled more than $175 billion in student loans for 5 million people. That’s equivalent to 11% of all outstanding student loan debt.

SoFi has said any additional forgiveness efforts could have a material impact on its operations as student loan refinancing within its lending operations is its largest segment. It would “materially and adversely” impact its profitability, financial condition, and future business prospects.

Trump has harshly criticized Biden’s efforts and has vowed to dismantle the Department of Education.

Better positions to capitalize on new opportunities

SoFi Technologies stock has been on the move higher since August and has doubled in value from that low point. Primarily as a result of moving away from its roots in the student loan business, it has added more customers and grown its deposit base. Over the past two years, SoFi’s deposits have more than tripled to $24.4 billion at the end of the third quarter.

As the Federal Reserve enters a new rate-easing cycle, SoFi stock should be able to navigate the lower interest rate environment. While its net interest income grew 66% last quarter to $154 million, noninterest income surged 235% to $84 million. 

Coupled with an improved regulatory and corporate tax environment during Trump’s presidency, the fintech stock’s earnings should widen. Rising profits should easily lift SOFI stock and allow it to hit $22 per share over the next four years.