Can SoFi Hold Above $8? - sofi stock analysis

Daily Stock Update

21 Sept 202406:25

Summary

TLDRIn today's stock update, the focus is on Sofi, which saw a slight 1.71% drop but held above the critical $8 mark. Despite market manipulation and low-volume trading, Sofi's stock maintained key support. The video discusses options trading, short-selling activity, and a notable SEC filing involving the sale of shares by an executive due to personal reasons. Upcoming Federal Reserve rate cuts and their potential market impact are also highlighted. Investors are advised to watch key support levels, with Sofi's earnings report expected soon. The video encourages viewer engagement and opinions on Sofi's performance.

Takeaways

📉 Sofi's stock recently experienced a drop of 1.71% but remained above the critical $8 mark.
🔄 The stock showed significant volatility, with a previous dip to $8.03, possibly due to market manipulation.
📈 Despite low volume trading, Sofi's stock held steady, which is a positive sign.
📄 An SEC filing indicated that Jeremy, likely due to divorce proceedings, is selling 68,000 shares.
💼 The selling by Jeremy is personal and should not be seen as a reflection of Sofi's performance.
🌐 There was no major news from Sofi, but the broader market is reacting to potential Federal Reserve rate cuts.
📊 Short sellers returned about 1.45 million shares, contributing to the day's volatility.
💹 About 18.5% of Sofi's free float is being shorted, indicating continued pressure on the stock.
📈 Options trading was active, with $946 million in call options and $578 million in put options.
📊 The stochastic oscillator suggests Sofi's stock is overbought, with potential for consolidation or a slight pullback.

Q & A

What recent price movement did Sofi experience?
-Sofi recently experienced a drop of 1.71%, but it held above the critical $8 mark, which is important for maintaining support.
Why is the $8 mark significant for Sofi's stock?
-The $8 mark is significant because staying above this level helps maintain support in a volatile market. There was even an effort to push the stock below $8, but it held steady.
What unusual trading activity was observed for Sofi stock?
-Around 35.9 million shares were traded, which is below the average of 40.6 million, but 6 million shares were traded after hours, likely tied to options trading.
What is the significance of the SEC filing mentioned in the script?
-The SEC filing showed that Jeremy, likely referring to a shareholder going through a divorce, sold 68,000 shares. This is personal and doesn't reflect on Sofi’s performance.
How might the Federal Reserve's potential rate cuts affect the market?
-Investors are speculating about potential 50 basis point rate cuts. Some believe it signals a recession, while others think it could drive consumer spending and push the market higher.
What was the short interest situation for Sofi stock?
-As of now, about 18.5% of Sofi’s free float is being shorted, translating to roughly 193.45 million shares. The average borrowing cost is around 0.93%, and there's still significant pressure on the stock.
What was notable about Sofi's options trading activity?
-Sofi closed above $8 with $946 million in call options and $578 million in put options. Despite holding above $8, about 66% of options activity was bearish, with a significant focus on the $8 strike price.
How did after-hours trading affect Sofi's stock?
-After-hours trading was active, with market makers likely covering options positions. This could lead to a small bump in Sofi's stock price early next week.
What technical indicators suggest Sofi may face a pullback?
-The stochastic oscillator shows Sofi is in overbought territory with a reading of 79. There’s also a bearish crossover forming, signaling potential consolidation or a slight pullback.
What support levels should investors watch for Sofi stock?
-If Sofi falls below $8.22, the next major support level is at $7.79. The stock has a chance to bounce off these levels and trend higher, especially with earnings on the horizon.

Outlines

00:00

📉 Sofi Stock Overview and Market Movement

The video discusses Sofi's recent stock performance, highlighting a 1.71% drop but maintaining a critical support level above $8. The speaker explains the significance of this level, given the stock's volatility and potential market manipulation due to low-volume trading. With around 35.9 million shares traded (6 million after hours), Sofi showed resilience despite pressure. Additionally, there was a significant SEC filing showing that Jeremy, likely driven by personal reasons such as a divorce, sold 68,000 shares. The video also touches on the Federal Reserve’s potential rate cuts and their impact on market dynamics.

05:02

📊 Sofi's Short Interest and Options Trading Activity

The video shifts focus to Sofi’s short-selling activity, noting that short sellers returned 1.45 million shares, which added volatility. Around 18.5% of Sofi's free float is being shorted, indicating persistent market pressure. The speaker dives into options trading, mentioning that while Sofi held above $8, most of the options activity (66%) was bearish. With nearly $946 million in call options and $578 million in put options, Sofi's price remains a subject of speculation. After-hours trading suggests market makers are covering options positions, possibly boosting the stock price early next week. Sofi's overbought status, as per the stochastic oscillator, hints at potential consolidation or a pullback soon.

📈 Sofi’s Future Performance and Key Levels to Watch

In this section, the speaker outlines the key support levels for Sofi. If Sofi falls below $8.22, the next major support is at $7.79, but there's optimism about a bounce, especially with earnings coming up in roughly 39 days. Historically, Sofi tends to rally before earnings, followed by a post-earnings selloff. The speaker is intrigued by the continued return of shares by short sellers but notes that short interest hasn’t dropped as much as expected. The video concludes by affirming that Sofi staying above $8 is a positive sign, with after-hours buying activity reinforcing this view.

Mindmap

Keywords

💡Sofi

Sofi, short for Social Finance Inc., is a financial services company that offers various products including student loan refinancing, personal loans, mortgages, and more. In the video, the focus is on Sofi's stock performance, highlighting its recent price fluctuations, short interest, and market movements. The video explores the significance of Sofi maintaining a stock price above $8 and analyzes various market factors affecting it.

💡Market manipulation

Market manipulation refers to actions by investors or institutions to artificially influence stock prices, often through low-volume trading or other strategies. The video mentions potential market manipulation of Sofi stock as the price nearly dropped below $8 but managed to hold steady. This suggests that certain players may be trying to influence the stock price to their advantage.

💡Short interest

Short interest is the percentage of a company's shares that have been borrowed and sold by investors who hope to buy them back at a lower price. The video notes that about 18.5% of Sofi's free float is being shorted, which reflects significant pressure on the stock. Short interest can drive volatility and affect a stock’s performance, as discussed in the video.

💡Options trading

Options trading involves buying and selling options contracts, which give the right to buy or sell a stock at a certain price before a specific date. In the video, options trading is highlighted as a significant factor in Sofi's stock price movements, particularly noting a large volume of call and put options at the $8 strike price. This options activity influences the stock's price and market sentiment.

💡Support level

A support level is a price point where a stock tends to stop falling and may bounce back up. In the video, the $8 mark is identified as a critical support level for Sofi. The stock's ability to hold above this price is seen as important for maintaining market confidence, especially in a volatile environment.

💡Stochastic oscillator

The stochastic oscillator is a technical indicator used to analyze a stock’s momentum and potential price movements. In the video, the oscillator for Sofi is noted to be in 'overbought' territory at 79, suggesting that the stock may experience a pullback or consolidation soon. This technical analysis is used to forecast future price behavior.

💡Federal Reserve rate cuts

Federal Reserve rate cuts refer to the reduction of interest rates by the U.S. central bank, which can influence borrowing costs, consumer spending, and overall market conditions. The video discusses speculation around potential rate cuts by the Federal Reserve and how this could impact both the broader stock market and companies like Sofi. Investors are trying to assess whether these cuts signal a recession or provide a boost to the economy.

💡Jeremy's stock sale

Jeremy, a key figure mentioned in the video, is selling 68,000 shares of Sofi due to personal reasons tied to his divorce. The video emphasizes that this stock sale should not be seen as a reflection of Sofi's performance but rather as a personal financial decision. It contrasts this sale with what would happen if a higher-ranking executive, like the CEO, were to sell shares.

💡After-hours trading

After-hours trading refers to the buying and selling of stocks outside of regular trading hours. In the video, it is mentioned that Sofi saw significant after-hours trading activity, with around 6 million shares traded. This after-hours movement, particularly by market makers covering options positions, is seen as a potential factor influencing Sofi’s price in the near term.

💡Earnings report

An earnings report is a quarterly financial document that publicly traded companies release to disclose their financial performance. The video hints at an upcoming earnings report for Sofi, expected in about 39 days, and notes that historically, Sofi's stock tends to rally in anticipation of earnings before selling off afterward. This creates a potential pattern for investors to watch.

Highlights

Sofi recently experienced a drop of 1.71% but managed to hold above the $8 mark, maintaining critical support despite market volatility.

Staying above $8 is seen as crucial for Sofi, especially with the market's volatility and wild price swings.

Low-volume trading manipulation was suspected, with 35.9 million shares traded, compared to an average of 40.6 million.

Jeremy, a major shareholder, sold 68,000 shares due to personal reasons (divorce), which doesn't reflect Sofi's performance.

Concerns arise if Sofi's CEO, Anthony Noto, were to sell shares, but Jeremy's sale isn't alarming.

Investors are awaiting Federal Reserve meetings in November and December, speculating about potential rate cuts and their impact on the market.

Short sellers returned about 1.45 million shares, contributing to volatility, with 18.5% of Sofi's free float being shorted.

The average borrowing cost for shorted shares is around 0.93%, which remains low despite the short interest.

Options trading was a key focus, with $946 million in call options and $578 million in put options, though 66% of the activity was bearish.

After-hours trading saw significant activity, with market makers likely covering options positions, possibly leading to a small price bump.

Technically, Sofi experienced consolidation, with the stochastic oscillator showing it's in overbought territory, potentially signaling a pullback.

Retail investors appear to be exiting positions, which may add to short-term pressure on the stock.

Key support levels to watch: If Sofi falls below $8.22, the next major support is at $7.79.

Sofi tends to rally in the leadup to earnings and sell off afterward, with earnings expected in approximately 39 days.

Despite short interest decreasing since its peak on September 13th, the drop hasn’t been as significant as expected.