SoFi Technologies Inc (NASDAQ:SOFI) shares are trading lower on Tuesday afternoon amid overall market weakness. The decline is mainly affecting growth stocks, which are under pressure from a surge in Treasury yields and investor concerns that high interest rates will hurt future earnings.
SOFI shares are experiencing downward pressure. See how it is currently doing here.
What To Know: The yield on the benchmark 10-year U.S. Treasury note continued its ascent to around the 4.3% level, a key factor weighing on equities. For growth-oriented companies like SoFi, higher yields can significantly impact their valuation. The intrinsic value of a growth stock is heavily dependent on its expected future cash flows.
When Treasury yields rise, the discount rate used to calculate the present value of these future earnings also increases. This, in turn, reduces the current valuation of the stock, making it less attractive to investors.
Read Also: CoreWeave Stock Is Getting Hammered Tuesday: What’s Going On?
As a fintech lender, SoFi’s business model is also sensitive to interest rate fluctuations. While higher rates can translate to better margins on loans, they can also dampen consumer demand for borrowing and increase the risk of defaults.
Furthermore, in a high-yield environment, safer investments like government bonds become more appealing, leading some investors to rotate out of more speculative growth stocks.
The sell-off in SoFi’s stock comes despite the company’s strong recent performance, including a strong second-quarter earnings report.
Benzinga Edge Rankings: Despite the market-driven downturn on Tuesday, Benzinga Edge rankings highlight the stock’s powerful underlying metrics, awarding it a Momentum score of 96.89 and a Growth score of 96.44.
Price Action: According to data from Benzinga Pro, SOFI shares are trading lower by 2.49% to $24.91 at publication on Tuesday. The stock has a 52-week high of $26.61 and a 52-week low of $6.75.
Read Also: Amazon Stock Is Sliding Tuesday: What’s Going On?
How To Buy SOFI Stock
By now, you're likely curious about how to participate in the market for SoFi Technologies — be it to purchase shares or even attempt to bet against the company.
Buying shares is typically done through a brokerage account. You can find a list of possible trading platforms here. Many will allow you to buy “fractional shares,” which allows you to own portions of stock without buying an entire share.
In the case of SoFi Technologies, which was trading at $24.93 on Tuesday, $100 would buy you 4.01 shares of stock.
If you're looking to bet against a company, the process is more complex. You'll need access to an options trading platform or a broker who will allow you to “go short” a share of stock by lending you the shares to sell. The process of shorting a stock can be found at this resource. Otherwise, if your broker allows you to trade options, you can either buy a put option or sell a call option at a strike price above where shares are currently trading — either way, it allows you to profit from the share price decline.
Image: Shutterstock
