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New Risk Factors for SoFi and Zoom Video
Stock Analysis & Ideas

New Risk Factors for SoFi and Zoom Video

In the continually evolving business environment, corporations are exposed to new risks that could hurt their financial and operating performance, and in turn, their stock price. Thanks to TipRanks’ new Risk Factors tool, keeping a tab on the evolving risk landscape of enterprises is now easy. 

Using the Risk Factors tool, investors can identify and assess newer risks before investing, thus reducing the chances of future disappointments. 

Accordingly, let’s understand the newly added risks of SoFi Technologies (SOFI) and Zoom Video Communications (ZM).

SoFi Technologies

SoFi is a fast-growing financial technology company. Per the TipRanks’ Risk Factors tool, SoFi’s main risk category is Finance & Corporate, which accounts for 44% of its total risks. Since September 2021, SoFi has added 42 new risks to this category. 

While most of these newly added risks hovered around the successful implementation of its growth strategy, financial condition, and forecasts, SoFi specifically said that it doesn’t intend to pay any cash dividends in the foreseeable future. On the contrary, SoFi plans to use its earnings to fund future growth. 

Speaking of growth, SoFi announced the acquisition of a national bank, which places it under comprehensive regulation and supervision. That partially explains why SoFi added 28 new risks to its Legal & Regulatory risk category since September 2021. 

It is worth noting that SoFi is awaiting the approval of its bank charter. While a successful approval could subject it to significant additional regulations, it would accelerate its growth and drive margins. 

Overall, SoFi’s risk distribution profile suggests that four of its six risk factors, including its Tech & Innovation, Legal & Regulatory, Ability to Sell, and Production risks, are well above the sector benchmarks.

Nonetheless, SoFi sports a Strong Buy rating consensus on TipRanks, based on 5 Buys and 1 Hold. The average SoFi Technologies price target of $26.33 implies approximately 45.1% upside potential to current levels.

Zoom Video Communications

Zoom Video Communications added one new risk to its Finance & Corporate risk category since October 2021. It’s worth noting that the Finance & Corporate risk category accounts for 38% of its total risks. While that might sound high, it still compares favorably to the sector benchmark of 40.3%.

Zoom Video Communications acknowledged that it invests in privately held and publicly traded companies that carry liquidity and volatility risks. The changes in the value of these investments could hurt its business and financials. 

Meanwhile, Zoom Video Communications stock has underperformed the Nasdaq composite index this year and is down about 35%. The weakness in Zoom Video Communications stock comes on the back of tough year-over-year comparisons. 

Overall, Zoom Video Communications’ risk distribution profile indicates that two of six risk factors, including its Tech & innovation and Ability to Sell risks, are above the sector benchmarks. Meanwhile, the rest compare favorably to the sector averages. 

On TipRanks, Zoom Video Communications has received 12 Buys and 12 Holds, for a Moderate Buy consensus rating. The average Zoom Video Communications price target of $310.44 indicates 39.2% upside potential to current levels.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates  Read full disclaimer >

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