Shares of companies pointed at the personal-financial space have been pummeled far worse than the broader market, but their chief executives are buying shares.
(ticker: NRDS), which provides investment education and tools, and
Technologies (SOFI), which offers financial services, both saw material open-market purchases as shares slid.
NerdWallet stock set an intraday low of $9.09 on Feb. 24, the day that it reported strong fourth-quarter revenue, after the market close, and coincidentally the day that Russia invaded Ukraine. The company’s November initial public offering priced shares at $18 each. NerdWallet shares have gained a bit since then, but with Friday’s close at $12.28 the year-to-date loss remains 21%. By comparison, the
S&P 500 index has slipped 6.4% so far this year.
NerdWallet CEO Tim Chen paid $1.2 million from March 7 through 15 for a total of 120,000 shares, an average price of $10.12 each, according to forms he filed with the Securities and Exchange Commission. It’s his first purchase of stock since the IPO.
“Tim is excited about what the future holds for NerdWallet,” the company said in an emailed statement. “He believes in the company’s business model and his decision to use personal funds to purchase NerdWallet stock reflects his confidence in our fundamentals, strategy, and ability to execute.”
After NerdWallet’s fourth-quarter report, KeyBanc Capital Markets analyst Justin Patterson lowered his price target to $30 from $35, “to reflect peer multiple compression…and market volatility,” he wrote in a Feb. 24 research report. Patterson reiterated an Overweight rating on NerdWallet stock, and noted that it “deserves a premium to peers given its growth rate and structurally higher long-term margins.”
On March 2, Patterson issued another report, after NerdWallet stock tumbled 12%, “which we attribute to investors assuming negative reads from SoFi’s earnings,” he wrote.
SoFi advertises on NerdWallet’s site, but investors may have overestimated the impact SoFi has; the analyst notes that no NerdWallet customer accounts for more than 10% of revenue. The NerdWallet stock move was an “overreaction,” he adds, because both companies spoke of a fourth-quarter 2021 one-time boost in the student-loans segments “due to consumer expectations that forbearance would end at the previous expiration date.”
But SoFi’s fourth-quarter report, issued on March 1, was actually good, according to BofA Global Research analyst Mihir Bhatia. He wrote that the quarter was “solid,” and that guidance was better than expected. But Bhatia downgraded SoFi stock to Neutral from Buy because shares only had 6% potential upside to his $14 price objective.
SoFi stock has slipped in the days after the earnings report, however. They are now down 38% so far this year, and set a record intraday low of $7.74 last week.
SoFi didn’t respond to a request to make Noto available for comment. He has served as CEO since 2018, before the company went public in June 2021 by merging with a special-purpose acquisition company, or SPAC. Noto, a former
Inside Scoop is a regular Barron’s feature covering stock transactions by corporate executives and board members—so-called insiders—as well as large shareholders, politicians, and other prominent figures. Due to their insider status, these investors are required to disclose stock trades with the Securities and Exchange Commission or other regulatory groups.
Write to Ed Lin at email@example.com and follow @BarronsEdLin.