What's Going On With SoFi Technologies Stock?

SoFi Technologies Inc SOFI shares are trading lower. Morgan Stanley downgraded the stock Thursday morning. 

What Happened: Morgan Stanley analyst Betsy Graseck downgraded SoFi from Equal-Weight to Underweight and raised the price target from $6.50 to $7, citing valuation concerns.

"We previously valued SOFI on a growth-adj. basis, given strong growth well above most banks/consumer lenders. But as SOFI looks increasingly like a bank, we believe it needs to be valued more like a bank," the Morgan Stanley analyst said in a note to clients.

Graseck noted that current share prices imply expectations for a return on average tangible common equity (ROTCE) of 30% or greater. The analyst anticipates closer to a 15% ROTCE by 2026. 

"Risk-reward is asymmetrical, in our view, with 30% upside to our bull case but 67% downside to bear price," Graseck said. 

Morgan Stanley has a $12 bull case price target and a $3 bear case target on the stock. 

SoFi shares are up more than 55% over the last three months and nearly 100% year-to-date. The stock was among the most-searched tickers on Benzinga Pro in June. SoFi has been volatile since the U.S. Supreme Court blocked the Biden Administration's student loan forgiveness program. 

SoFi is set to report second-quarter financial results before the market opens on July 31. The company is expected to report a loss of 6 cents per share on quarterly revenue of $475.94 million, according to Benzinga Pro.

Check This Out: SoFi Shows Wild Price Action After Supreme Court Axes Student Loan Forgiveness: The Bull, Bear Case

SOFI Price Action: SoFi shares were down 3.15% at $8.91 at the time of publication, according to Benzinga Pro.

Photo: Lorenzo Cafaro from Pixabay.