If a CEO is spending millions of dollars on company stock, investors should take note. CEOs tend to be way ahead of analysts and portfolio managers when it comes to the performance of their companies and their stock purchases can provide valuable trading signals.
In this report, we are going to highlight a large CEO purchase at SoFi Technologies Inc (SOFI:US). SoFi is a digital personal finance company that allows members to borrow, save, and invest their money. The company, which aims to help people reach financial independence, has nearly five million members. It is listed on the Nasdaq and has a market capitalization of $3.76 billion at present.
Insider Buying at SoFi
2iQ data shows that between December 9 and December 16, SoFi CEO Anthony Noto purchased 1,659,065 shares at prices of between $4.29 and $4.59 per share. This insider trading activity cost the insider around $7.5 million.
Mr. Noto has an investment background. Earlier in his career, he worked at Goldman Sachs, where he was Co-Head of Global TMT Investment Banking for four years. He also served as Head of Communications Media and Internet Equity Research at the company. Given his background, he is likely to have a good understanding of SoFi’s investment potential.
What stands out here is the size of Mr. Noto’s purchase. The fact that the insider has invested over $7 million in SoFi stock suggests that he is very confident the stock is set to move higher.
Full-year Guidance Raised
SoFi continues to generate strong growth.
For the third quarter of 2022, the company generated record adjusted net revenue of $419.3 million (its sixth consecutive quarter of record adjusted net revenue), up 51% year on year. Adjusted EBITDA was also a record, coming in at $44.3 million, up 332% year on year.
At the end of the quarter, the group had total members of 4.7 million, up over 1.8 million, or 61%, from the end of Q3 2021.
As a result of the strong growth in Q3, the company raised its guidance for the full-year 2022. It now expects full-year adjusted EBITDA of $115-$120 million, up from previous guidance of $104-$109 million.
In light of this growth, we see the legal insider trading actovity here as a bullish indicator.