3 Financial Services Stocks Investors Shouldn’t Buy Right Now

Financial service providers typically benefit from a rising interest rate environment due to the positive correlation of their revenues with interest rates. However, financial services stocks SoFi Technologies (SOFI), Marathon Digital (MARA), and BitNile (NILE) are not well positioned to capitalize on the current rate environment. These stocks should be avoided due to their exposure to risky assets or their fundamental weakness. Read more….



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The stock market has been under pressure from the Fed’s aggressive rate hikes. Despite the Fed’s aggressive stance, inflation has hovered persistently at multi-decade highs.

August’s consumer price index (CPI) rose 8.3% year-over-year, beating economists’ estimates. Stubborn inflation sent the Fed back into action, raising the benchmark interest rate by 75 basis points for the third straight time last month.

While the rising rate environment has affected most sectors, it has helped financial companies expand their revenues. Although the environment of rising interest rates benefits financial services companies, the collapse of risky assets such as cryptocurrencies has been a major deterrent for many significantly exposed to them.

Given this backdrop, it would be prudent to avoid fundamentally weak financial services stocks SoFi Technologies, Inc. (SOFI), Marathon Digital Holdings, Inc. (MARA), and BitNile Holdings, Inc. (NILE).

SoFi Technologies, Inc. (SOFI)

SOFI is a digital financial services company. It operates through the loan, financial services and technology platform segments. The company’s credit segment offers student loans and home and personal loans.

The financial services segment provides investment and cash management services through SoFi Money, SoFi Invest, SoFi Credit Card and SoFi Relay. Its technology platform segment offers the benefits of Galileo and Apex.

SOFI’s non-interest expense increased 15.5% year over year to $458.24 million for the second quarter ended June 30, 2022. full responsibility for the quarter ended June 30, 2022, it was $7.16 billion, compared to $4.48 billion for the fiscal year ended December 31, 2021. Its net loss and loss per share was $95 .84 million and $0.12, respectively.

Analysts expect SOFI’s loss per share for the current quarter to widen 100% year over year to $0.10. Over the past year, the stock fell 72.7% to close the last trading session at $4.97.

SOFI’s weak fundamentals are reflected in its POWR Ratings. The stock is rated F overall, which equates to a strong sell on our proprietary rating system. POWR ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

It has an F rating for Stability and Quality and a D for Growth and Value. Within the F classification Financial Services (Company) industry, ranks 101st out of 103 stocks. To see SOFI’s other ratings for Momentum and Sentiment, Click here.

Marathon Digital Holdings, Inc. (MARA)

MARA is a digital asset technology company primarily focused on cryptocurrency mining in the blockchain ecosystem and operates as a digital asset generator in the US.

MARA’s revenue decreased 15% year-over-year to $24.92 million for the second quarter ended June 30, 2022. Its operating loss widened 61.6% year-over-year to $178.21 million. The company’s net loss widened 76% year over year to $191.65 million. Additionally, its loss per share widened by 60.5% year over year to $1.75.

Analysts expect MARA’s loss per share for the current quarter to widen 86.4% year over year to $0.41. Its revenue for the quarter ended September 30, 2022 is expected to decline 45.6% year over year to $28.14 million.

It failed to beat consensus EPS estimates in each of the four subsequent quarters. Over the past year, the stock fell 72.7% to close the last trading session at $10.76.

MARA’s POWR ratings reflect this gloomy outlook. It has an overall rating of F, which translates to a strong sell on our proprietary rating system.

It has an F rating for Growth, Value, Stability, Sentiment and Quality. To view MARA’s rating for Momentum, Click here.

BitNile Holdings, Inc. (NILE)

NILE and its subsidiaries design, develop, manufacture, and sell power system solutions for the defense/aerospace, industrial, automotive, telecommunications, healthcare, medical/biopharmaceutical, and textile industries in North America, Europe, the Middle East, and the United States. internationally. The company is also engaged in Bitcoin mining and provides digital marketing services.

On September 22, 2022, Kaskela Law LLC announced that it would investigate NILE on behalf of the company’s investors, seeking to determine whether NILE and/or company representatives made false and/or misleading statements and/or failed to disclose material information. to its investors, causing losses to investors.

NILE revenue decreased 72% year over year to $17.37 million for the second quarter ended June 30, 2022. The company’s operating loss was $23.72 million, compared to revenue from operations of $45.82 million in the same period of the previous year. Also, its net loss was $25.81 million, compared to a net profit of $42.21 million in the same period a year earlier.

Analysts expect NILE’s EPS for FY2022 to remain negative. Over the past year, the stock has lost 92.3% to close the last trading session at $0.18.

NILE’s overall F rating equates to a strong sell in our POWR rating system. It has an F rating for Growth, Stability and Quality and a D for Sentiment.

NILE ranks last out of 111 stocks in the (business) financial services industry. Click here to view the other NILE ratings for Value and Momentum.


SOFI shares were trading at $4.84 per share on Tuesday morning, down $0.13 (-2.62%). Year-to-date, SOFI is down -69.39%, versus a -24.03% rise in the benchmark S&P 500 index over the same period.


About the author: Dipanjan Banchur

Ever since he was in elementary school, Dipanjan was interested in the stock market. This led him to earn a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a keen interest in reading and analyzing emerging trends in the financial markets.

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The charge 3 Financial Services Stocks Investors Shouldn’t Buy Right Now first appeared in StockNews.com

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