SoFi stock is down today. Is this a buying opportunity in 2024?

SoFi technology (Sophie -13.89%) The stock fell sharply in Wednesday trading. Shares of the fintech company ended the daily session down 13.9%.

SoFi stock fell in today’s trading following news that Keefe, Bruyette & Woods (KBW) analyst Michael Perito downgraded his rating on the stock from market perform to underperform. In addition to the downgrade, Perito lowered his one-year price target on the stock from $7.50 per share to $6.50 per share.

Is the massive sell-off in SoFi stock a buying opportunity?

Today’s massive sell-off in SoFi stock following a bearish report from KBW analyst Michael Perito highlights the fact that the company’s stock is speculative and trades at a growth-driven valuation. Analyst coverage tends to have a big impact on companies with uncertain futures.

SoFi’s business continues to grow revenue at an encouraging double-digit rate, but it’s still difficult to predict where the business will be headed in the long term. SoFi’s revenue increased approximately 27% year-over-year in the third quarter to $531 million. The fintech company ended the third quarter with 6.9 million total members. This is a 47% increase compared to the previous year. SoFi’s revenue and membership base have continued to see a solid pace of expansion, but questions remain about the company’s ability to deliver long-term revenue growth.

Even though SoFi stock is down about 68% from its lifetime highs, the valuation picture is complicated.

SOFI PS Ratio(Forward) data from YCharts

Trading at approximately 3.15x forward sales, SoFi appears attractively priced in the context of recent revenue growth. On the other hand, the company is trading at approximately 98 times expected future earnings, and the performance trajectory of the business remains highly speculative.

For risk-tolerant investors willing to embrace volatility while seeking potentially explosive returns, SoFi could be a smart portfolio addition following the recent selloff. This stock probably isn’t for investors looking for a stock that doesn’t have the potential for a major downside. However, we will continue to see bounce-back trades that deliver strong returns.