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SOFI Stock Is the Disinflation Play of the Year

Federal Reserve Chairman Jerome Powell has introduced the word “disinflation” to the national conversation. That’s good news for financial businesses, including neo-banking firm SoFi Technologies (NASDAQ:SOFI). Furthermore, SOFI stock should grow in tandem with SoFi Technologies’ customer count.

How can we describe SoFi Technologies? Is it a bona fide bank or a disruptive, one-stop-shop personal finance service provider? The answer is all of the above, as SoFi is on a quest to change banking as we know it.

Earning a banking charter didn’t help SoFi Technologies last year, as legitimate banks didn’t get much relief from an aggressively restrictive central bank. As the tide of monetary policy turns, however, SoFi Technologies can prosper and the company’s investors may enjoy a sudden windfall in 2023.

What’s Happening With SOFI Stock?

After a painful 2022, SOFI stock showed signs of life in January of this year. Importantly, the SoFi Technologies share price broke above the $5 level and hasn’t fallen below that level so far. $10 will be the next resistance point to keep an eye on.

There are reasons to believe that a $10 share price is attainable this year. Consider, first and foremost, SoFi’s amazing membership growth. Quarter after quarter, SoFi Technologies continues to increase its membership by more than 50% year over year. Indeed, the company achieved this feat once again in 2022’s fourth quarter.

Moreover, SoFi has consistently increased its number of new products by more than 50% on a year-over-year basis. Again, SoFi Technologies continued this winning streak in Q4 2022. Don’t be surprised, then, if SOFI stock reflects this consistent growth in the near future.

If Disinflation Is the Buzzword, Then That’s Good for SoFi Technologies

Powell, as Fed chairman, has the power to influence monetary policy. He can also influence the national conversation about fiscal policy, and lately he’s been using the word “disinflation” a lot. That’s not a problem at all if you happen to be invested in SoFi Technologies.

One of the main reasons SOFI stock struggled last year was because, as a bona fide bank, SoFi Technologies was vulnerable to monetary policy changes. Three consecutive “jumbo” 75-basis-point interest rate hikes crimped borrowing and lending activity, and that put negative pressure on SoFi Technologies.

This year, however, Powell is recognizing disinflation; he mentioned it at least a dozen times in a press conference after the most recent Federal Open Market Committee (FOMC) meeting. Then, Powell continued to acknowledge disinflation just a few days later at an event in Washington, D.C.

Clearly, Powell recognized that inflation is coming down. Besides, the Fed’s interest rate hikes have gone down from 75 basis points to 50, and then to just 25. More accommodative monetary policy should benefit lenders like SoFi Technologies — maybe not immediately, but potentially in the coming months.

What You Can Do Now

If disinflation continues, that’s good news for America’s consumers and great news for SoFi Technologies. Disinflation could boost the business of many U.S.-based lenders in 2023, including SoFi.

Additionally, SoFi Technologies is growing in more ways than one. Q4 of 2022 was another great year for SoFi in terms of membership and product growth. Therefore, investors can prepare for a possible share-price recovery this year, perhaps even to $10 or more, with a small stake in SOFI stock.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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