The better-than-expected employment report for September indicated that the economy is not cooling down fast enough and has paved the way for yet another…
massive rate interest hike by the Federal Reserve in November. An expected increase in borrowing costs has caused a fresh bout of panic in the stock market.
The Nasdaq composite slipped into a bear market for the second time this year. Also, the S&P 500 and the Dow Jones are already in bear markets, defined by a decline of 20% or more from their recent peaks.
With earnings estimates for the recently concluded quarter cut by analysts and investors on edge ahead of Thursday’s inflation data, the markets seem unlikely to settle down anytime soon. Moreover, the funding drought caused by rising interest rates is expected to make the survival of fundamentally weak companies, which are yet to find their way to consistent profitability, an uphill battle.
Therefore, we suggest shorting struggling stocks SoFi Technologies, Inc. (SOFI) and Cassava Sciences, Inc. (SAVA).
SoFi Technologies, Inc. (SOFI)
SOFI operates as a one-stop shop for financial services through its platform. The company operates through three segments: Lending; Technology Platform; and Financial Services.
On August 9, SOFI announced the launch of two new ETFs: SoFi Web 3 (TWEB) and SoFi Smart Energy (ENRG). However, with markets under significant pressure due to macroeconomic and geopolitical headwinds, it may be quite a while before these new launches find traction among investors.
In the second quarter of fiscal 2022 ended June 30, SOFI reported a net loss of $95.84 million and a net loss per share of $0.12. During the same period, its non-interest expense increased 15.5% year-over-year to $458.24 million. The company’s total liabilities stood at $7.16 billion as of June 30, 2022, compared to $4.48 billion as of December 31, 2021.
SOFI’s loss per share for the fiscal 2022 third quarter (ended September) is expected to come in at $0.07. Also, analysts expect the company to report a net loss of $0.32 per share for the current fiscal year, ending December 2022. SOFI has failed to surpass the consensus EPS estimates in three of the trailing four quarters.
The stock has declined…
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