A record number of companies have gone public so far this year, with a few more months left on the calendar. And the total amount of capital raised has been a record too. Yet many freshly-public companies haven’t been strong performers.
In time, that will change, as fast-growing companies start to show their mettle and move higher on the back of strong growth. Recently-public companies that can’t grow will likely see their shares slide in time.
One fast-grower is SoFi Technologies (SOFI). The company received a buy rating recently, on the grounds that the company was the fastest growing company in consumer finance.
The consumer credit services company has seen its revenue double in the past year, and shares are up 33 percent over the same timeframe. However, shares are well off their 52-week highs, set before the company fully went public via a SPAC merger.
Action to take: While many SPAC companies are facing an overhang right now, SoFi’s growth and its place in the consumer credit space likely points to a much higher valuation for the company in time. It’s still early for shares, but they can likely be a big winner over a multi-year period, as many financial companies are when bought while out of favor.
On the back of its recent upgrade, shares have started moving higher. Traders might consider the April $25 calls. Last going for about $1.75, they could move in-the-money if shares make a run for their old all-time highs on the way even higher.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.