To understand where SoFi Technologies (NASDAQ:SOFI) stock currently stands I’d argue it’s best to start with the fundamentals. They point to a reasonably strong case for optimism given SoFi’s low current price. 

Then, it becomes necessary to also understand why SoFi lost as much value as quickly as it did. Once investors consider those two factors, the potential opportunity becomes clearer. So, let’s begin with the fundamentals behind the company’s recent performance. 

Strong Performance 

A good part of the reason that many investors are high on SOFI stock right now is that it is simply performing well. Companies that beat Wall Street’s expectations generally then get rewarded by the market. Oftentimes, a quarterly earnings beat can keep a stock higher for several months. 

And when SoFi released quarterly earnings on Nov. 10 its stock did rise as well. That was short-lived, though. We’ll talk about the reasons why, but first we should rehash the strength SoFi has shown. 

As the company’s earnings release noted:

“Third quarter 2021 adjusted net revenue of $277 million exceeded quarterly guidance of $245 million to $255 million by 13% at the low end and 9% at the high end. Adjusted EBITDA of $10 million for the quarter exceeded quarterly guidance of $(7) million to $3 million by $17 million at the low end and $7 million at the high end.”

So, it was no surprise then when SOFI stock jumped 12.5% on this positive news. Unfortunately, it would only stay there for a few days, as Nov. 15 signaled a sharp downturn for share prices. 

A Big Mid-November Sell Off 

Beginning in mid-November a number of big name shareholders of SOFI stock reduced their positions. 

SoftBank (OTCMKTS:SFTBY) and Silver Lake Partners announced that they were undertaking a secondary offering of 50 million SoFi shares. 

That served as a strong signal of impending trouble. The firms didn’t receive any proceeds from the sale. That alone suggests that they didn’t see any upside at the prospect of simply holding onto SoFi shares. 

And another institutional investor, Third Point Management, soon thereafter released a regulatory filing that it too had exited its SoFi position entirely. 

On Nov. 18, Chamath Palihapitiya, CEO of Social Capital Partnership, the venture capital firm that brought SoFi public, sold 15% of his stake in the company. 

If you’re counting, the initial selloff dropped prices from about $22 to $20. Since Palihapitiya announced his selloff, it dropped from $20 to around $16. 

These concrete moves sounded alarm bells around the financial technology (fintech) world. Many players in the sector have struggled. These institutional selloffs only fuel the narrative that real trouble exists. 

At the same time, bullish investors are pointing to SoFi’s strong quarterly results as a real buy-the-dip opportunity. 

What Bulls Are Ignoring With SOFI Stock

Now the bulls aren’t entirely wrong here. There’s reason to believe SoFi will be even stronger moving forward and the company itself gave a bullish guidance prior to the downturn.

“Management expects an acceleration of annual growth in the fourth quarter of 2021, with expected adjusted net revenue of $272 million to $282 million, up 49–55% year-over-year, versus 28% year-over-year growth in the third quarter, and expected adjusted EBITDA of $2 million to $5 million.”

But it’s difficult to reliably identify what SoFi’s business will look like in a few quarters or, much less, a year.

The company’s lending is separated into three categories; home loans, personal loans, and student loans. Personal loans grew by 166% in the third quarter year-over-year while student and home shifted by -6% and 26%, respectively. And as of now, Personal loans comprise half of originations.

That’s a big shift. They made up roughly 30% a year ago.

Anyway, my overarching point is that student loans and home loans are uncertain businesses at present. No economist can accurately predict where they’re going and yet they make up 50% of SoFi’s originations. So, it’s hard to predict what its mix might look like in a year’s time. 

What To Do With SOFI Stock Now

I would simply avoid SOFI stock for now.

Yes, there looks to be a bullish opportunity based on prices and price predictions. But between a host of selloffs, fintech issues, and business mix issues related to loans, there are a lot of questions that no one can answer now.

You can’t reliably say that SoFi is in a strong position.

On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.