Get all your news in one place.
100’s of premium titles.
One app.
Start reading
Barchart
Barchart
Pathikrit Bose

2 Fintech Stocks with Big Insider Buying

When company insiders - a group that includes executives, directors, and major shareholders - purchase their company's stock, it's often viewed as a positive sign for the stock's future performance. This is because insiders are generally assumed to have a deeper understanding of the company's inner workings and strategic plans compared to the general public.

Information about insider buying and selling activity can be found via publicly available Form 4 filings. Typically, larger transactions made by top executives carry more weight - and insider stock purchases tend to be more revealing, from a sentiment perspective, than sales. 

In this context, let's take a look at two hot fintech stocks that have been the target of major buying recently from top insiders.

Block

Block (SQ), formerly known as Square, is a financial services company that offers payment processing, point-of-sale, and other business services. Founded by Twitter (now X) co-founder Jack Dorsey, Block currently commands a market cap of about $33.8 billion.

Block stock is down about 10% on a YTD basis, thanks to a sharp 40% rally so far in November.

www.barchart.com

Meanwhile, Block Director Roelof Botha just made a significant investment in the company's shares right around the round $50 level.

Botha, of Sequoia Capital, purchased more than half a million shares (540,646 shares, to be precise) for an average price of $50.89. The total SQ purchase amount was over $27.5 million. After the completion of this transaction, Botha now owns 0.2285% of the company.

www.barchart.com

So, should you follow Botha into Block stock? Here are some of the recent highlights:

Strong Q3 Results: Block posted a strong set of numbers for its latest fiscal Q3 results. Revenues of $5.62 billion in Q3 came in 24% above the year-ago period, with all key segments (except hardware revenue) reporting yearly growth. EPS increased by 31% to $0.55, surpassing the consensus estimate of $0.47. Notably, the company's EPS has topped expectations in four out of the past five quarters.

$1B Share Buyback: Block just announced a $1 billion share repurchase. With cash reserves of over $6 billion, this appears to be a prudent move on the part of the company to support its stock and protect against dilution.

Analysts Are Upbeat: Finally, analysts remain bullish about Block. On average, analysts have a “Moderate Buy” rating on the stock, with a mean target price of $74.14. This denotes an upside potential of roughly 31% from current levels. Out of 34 analysts covering the stock, 22 have a “Strong Buy,” two have a “Moderate Buy,” and 10 have a “Hold” rating.

www.barchart.com

SoFi Technologies

Founded just over a decade ago in 2011, SoFi Technologies (SOFI) is an online personal finance company that provides a range of financial products and services to its members, including student loan refinancing, mortgages, personal loans, credit cards, investing, and banking. Its market cap currently stands at $7.1 billion.

Unlike Block, Sofi stock has rallied more than 59% on a YTD basis.

www.barchart.com

So far this year, CEO Anthony Noto has been a significant buyer of SoFi stock, and CFO Christopher LaPointe followed suit earlier this month. 

The latest C-suite transactions were carried out on Nov. 9, when LaPointe purchased 14,950 shares at an average price of $6.69 for a total consideration of about $100,000. On the same day, CEO Noto bought 44,000 shares of the company at an average price of $6.7783 for a total sum of $298,246. 

Following these transactions, LaPointe and Noto hold stakes of 0.0870% and 0.7619% in the company, respectively. Notably, on a cumulative basis, Noto has purchased SoFi shares worth over $2.5 million so far in 2023.

www.barchart.com

Here's what else you need to know about SoFi stock right now:

Record Revenues and New Member Additions: In Q3 2023, SoFi reported record net revenues of $530.72 million, up 27% from the previous year. This was supported by record new member additions of 717,000, taking the total number of members to 6.9 million (+47% YoY). Deposit growth was also reported at 23% from the prior year to $15.7 billion.

On an adjusted basis, SoFi lost $0.03 per share, which surpassed estimates for a loss of $0.08 per share. Looking ahead, the lender upped its full-year revenue guidance to a range between $2.045 billion and $2.065 billion.

Loan Origination Strength: For the first time in two years, all three lending segments of SoFi reported yearly growth. Notably, Personal Loans grew by 38% from the prior year to $3.9 billion, while Home Loans and Student Loans rose by 64% and 101% from the prior year to $356 million and $919 million, respectively.

Analysts Are Getting More Bullish: Overall, analysts have deemed SoFi stock a “Hold,” with a mean target price of $9.50. This represents an upside potential of about 29% from current levels. Out of 17 analysts covering the stock, five have a “Strong Buy” rating, 10 have a “Hold” rating, and two have a “Strong Sell” rating - an improvement from only four “Strong Buys” and four “Sell" or worse ratings just a few months ago.

www.barchart.com
On the date of publication, Pathikrit Bose did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.