What happened
SoFi Technologies (SOFI 1.11%) continued its winning streak in June as the stock price rose 20.2% for the month, according to S&P Global Market Intelligence. This follows a gain of 11.4% in May. As of July 5, SoFi was up 83% year to date, trading at around $8.45 per share.
June was an excellent month for the markets, as the S&P 500 was up 6.5%, the Dow Jones Industrial Average gained 4.6%, and the Nasdaq Composite jumped 6.6% in June.
So what
The fintech had a couple of key catalysts in June. The first was the passage of the debt ceiling -- a deal that was agreed to in late May but officially approved by Congress on June 1. This was of particular interest to SoFi as one of the provisions was to end the moratorium on student loan repayments that had been in place since the start of the pandemic and extended several times. As a major student loan lender, SoFi had been lobbying for this provision and even sued the federal government over it. With the passage of the debt ceiling, SoFi agreed to drop its lawsuit. SoFi had lost an estimated $300 million in revenue from the moratorium.
The second win in June for SoFi was the Federal Reserve Board electing not to raise interest rates for the first time in more than a year. The pause in rate hikes, while probably temporary, is due to a steady drop in the inflation rate, among other factors, and is generally considered good news for the economy.
NASDAQ: SOFI
Key Data Points
The final catalyst was the Supreme Court's ruling last week, by a 6-3 vote, that struck down President Joe Biden's federal student loan forgiveness proposal. The stock price initially surged on the news and trading had to be halted as it tripped the circuit breakers. But then the stock price fell back some as the gains were likely baked in, given the conservative bent of the court.
Now what
While Biden said his administration will look for ways to work around the Supreme Court ruling to find debt relief for student loan borrowers, there are questions around what that would look like and how effective it would be.
But long-term, these developments in the month of June around student loan repayment should benefit SoFi. The company had a net loss in the first quarter, so it will be interesting to see SoFi's second-quarter results when they are posted around Aug. 1. Also, it has had an incredible run so far this year and its price-to-sales ratio has crept up to 4.7 from 3.5 on March 31. And there may be some profit-taking from investors after the run-up. It remains a good long-term stock, but there could be some near-term volatility.
