SoFi stock price forecast after the Fiscal Responsibility Act bill

SoFi Technologies’ (NASDAQ: SOFI) stock price has made a modest recovery in the past few days. The shares jumped to a high of $7, the highest point since February 17. It has jumped by more than 55% from the lowest level this year. 

Student loans repayments

SoFi is a leading technology company that provides a wide suite of financial services like student loans, crypto trading, mortgage loans, and insurance among others. The company is best known for the student loans and refinancing that it provides to millions of people.

SoFi stock price jumped after the House of Representatives voted for the debt ceiling deal on Wednesday. The deal, if passed in the Senate, means that the US will not default on its financial obligations. It also means that the country will not be downgraded.

Most importantly, SoFi stock price jumped because part of the deal calls for people with student loans to start paying them back. The US suspended these payments during the pandemic. Therefore, SoFi will start making money on these loans soon. In the last earnings call, the company’s CEO said:

“Student loan refi continues to be impacted as federal borrowers still await clarity on the end of the moratorium on federal student loan payments.”

These loan products will help to supercharge the company’s business, which is still doing well. The company’s revenue jumped by 33% in the first quarter to $325 million, as I wrote here. This performance was helped by the company’s interest income as interest-earning assets jumped. 

SoFi also boosted its forward guidance. It expects that it revenue for the second quarter will come in at between $470 million and $480 million. Further, the company hopes that its full-year revenue will be between $1.95 billion and $2 billion. With the passage of the debt ceiling bill, we expect that the company’s revenue will be higher than its guidance.

SoFi stock price forecast

The 4H chart shows that the SoFi share price has been in a strong bullish trend in the past few days. It has moved above the important resistance point at $6.54, the highest point on May 1. The MACD has moved above the neutral point while the Relative Strength Index (RSI) has jumped above the overbought level.

Therefore, I suspect that the SoFi Technologies share price has more upside in the coming weeks. If this happens, the shares will likely jump to the key resistance point at $8.25, the highest point on February 2. The bullish view is supported by analysts at Mizuho, who wrote that bears were:

“They wrongly conclude that since no personal loans were sold in Q1, SOFI is unable to sell its loans. We believe the correct reasoning is that SOFI is able to earn ~6.4% annualized yield on holding its personal loans, which is more attractive than selling them at ~5%.”