Fed Rate Cuts Make This Beaten-Down Cathie Wood Stock a Buy Now

Core Viewpoint - Cathie Wood's Ark Innovation ETF (ARKK) has gained over 20% in the past year, focusing on stocks involved in disruptive innovation, with SoFi Technologies, Inc. (SOFI) being a notable example [1] Company Overview - SoFi Technologies, Inc. has evolved from a student-loan provider to a versatile fintech company, yet its stock has underperformed the Technology Services industry year to date, down 20.4% compared to the industry's gain of 25.1% [2] - The underperformance is attributed to elevated interest rates impacting SoFi's lending business, which generates the majority of its revenue [2] Interest Rate Impact - The Federal Reserve recently cut interest rates by 50 basis points, maintaining key rates between 4.75% and 5%, marking the first easing of monetary policy in four years [3] - Further rate cuts are anticipated, with notable investment banks expecting additional reductions in 2025 and 2026 [4] - A lower interest rate environment is expected to reduce SoFi's borrowing costs, enabling more investment in technology and enhancing its lending business [5] Lending Business Prospects - As borrowing costs decrease, consumer spending is likely to increase, positively impacting SoFi's lending segments, including home equity, home lending, and purchase loans [6] - SoFi has improved its small and medium-scale business lending platform and is focusing on secured lending products to mitigate risks [7] Growth Initiatives - SoFi is diversifying its financial services beyond lending, with an investment platform offering various products, positioning the company for future expansion [8] - The introduction of multiple products is expected to enhance operating income and profitability, with initiatives in credit cards and a growing demand for the SOFI Plus premium membership program [9] Stock Outlook - The Zacks Consensus Estimate for SOFI's earnings per share is projected at 10 cents, reflecting a 233.3% increase from the previous year [10] - Prominent brokers have raised the average short-term price target for SOFI by 7.2%, with the highest target at $12, indicating a potential upside of 49.1% from the last closing price of $8.05 [11]