Key points:
- SoFi Technologies shares fell despite acquiring Technisys for $1.1 billion.
- Today’s decline was a classic “buy the rumour, sell the news” scenario.
- I would wait for a strong buy signal before buying SoFi Technologies stock.
The SoFi Technologies Inc (NASDAQ: SOFI) stock price fell 3.16% after the digital finance and banking group announced that it was acquiring banking software developer Technisys SA for $1.1 billion, an all-stock deal.
Today’s market reaction to the acquisition is not new. Investors also reacted negatively to news that the company had completed the acquisition of Pacific Banking Corp earlier this month, completing its transition into a full-fledged bank.
Also, Read Best Financial Stocks to Buy Right Now.
The phenomenon affecting SoFi Technologies’ share price is the classic “buy the rumour, sell the news” scenario. A stock will rally before a positive event and then sell-off after the event as investors take profits on their position.
By acquiring Technisys, SoFi bank will now own its core banking software, which is the back-end technology banks use to power their internet baking systems mobile banking applications to track customer deposits and open accounts.
The acquisition marks a significant milestone for SoFi technologies and places it in a powerful position to expand its banking services across the United States as a truly national bank.
SoFi Bank has an advantage over other traditional brick and mortar banks due to its firm foundations as a digital-first bank. It started as a digital finance mobile application before its latest transition.
SOFI stock has fallen 27.96% since the start of 2022 and is currently trading at a long-term support level that could trigger a bounce and a new rally phase. However, the lats rally attempt was met by significant selling pressure.
I wouldn’t buy SOFI shares at their current prices, but I would wait for its share price to break above the $13.50 upper end of the sideways trend and buy at $14, which could signal a new bullish trend.
Meanwhile, I would adopt a wait-and-see approach regarding SOFI shares since we could get another push lower before the next rally phase begins.
*This is not investment advice. Always do your due diligence before making investment decisions.
SoFi Technologies stock price.
SoFi Technologie stock fell 3.16% to trade at $11.03, falling from Friday’s closing price of $11.39.