To investors bullish on SoFi Technologies (NASDAQ:SOFI) stock, the recent performance of its shares may seem irrational. In their view, the market is failing to factor in the potential tailwind stemming from the lifting of the student loan moratorium starting Jan. 1, 2023.

After this happens, this fintech firm will supposedly benefit from a big jump in demand for its student lending refinancing products. In turn, enabling SoFi to deliver results ahead of expectations, which will spark a recovery for its hard-hit shares.

In my view, the market is not ignorant of this factor. It’s just that negative factors like high inflation, rising interest rates and growing recession risk far outweigh it.

If anything, buzz about this student loan catalyst is for now helping to soften the blow. This points to big downside ahead once the buzz surrounding this would-be catalyst starts to dissipate in a few months.

SOFI Stock Is Seriously Mispriced

Last week, SoFi Technologies hit a new all-time low. To fans of this stock, this may appear to be a can’t-miss buying opportunity. In their view, shares have become the victim of severe market mispricing.

I agree that SOFI stock is mispriced, but not in the same way the bulls see it. Instead of being undervalued, despite the student loan catalyst, shares are instead overvalued. The hope and hype among some investors about this factor is helping to partially counter the negative factors driving most investors to bid the stock lower.

Bullish investors are overestimating the impact of SoFi’s student loan catalyst. Analyst estimates, which call for nearly 40% revenue growth next year, already take into account the fact the company’s student loan refinancing business is just about to exit its current state of near-dormancy.

It may prove difficult for SoFi to deliver results that beat sell-side forecasts. For instance, more recent borrowers may have little incentive to refinance their loans. From July 1, 2020, to June 30, 2021, both subsidized and unsubsidized student loans were issued at a fixed interest rate of just 2.75%, well below the rates the company is currently quoting.

More Declines Likely as Headwinds Persist

SOFI stock and perceived student loan tailwind benefits are a matter of “when” not “if. Unfortunately, come next year when repayments are back in full swing, they are unlikely to result in better-than-expected quarterly results for SoFi Technologies.

As this happens, you can expect excitement about the student loan catalyst to disappear. Bad news indeed, as the above-mentioned headwinds applying pressure to the stock carry on, having a negative impact on both SoFi’s operating performance, as well as its stock price.

With the Federal Reserve expected to continue raising interest rates to fight inflation, a 2023 recession appears to be a near possibility. This could affect SoFi’s results in the coming year and extend its timeline to profitability.

If that’s not bad enough, rising rates could hurt SOFI shares in another way. As I’ve argued before, higher rates mean a lower present valuation for this growth stock, valued primarily on future results.

Admittedly, downside risk from here may be minimal. This stock currently has a tangible book value of $3.34 per share. That said, keep in mind that along with moderate downside, there’s minimal upside potential.

The Verdict on SOFI Stock

Besides the risk that SOFI has a way to go before bottoming out, is the risk that this former market darling, down nearly 80% from its all-time high, will fail to make much of a comeback even after today’s macro uncertainties pass.

Take a look at long-term earnings forecasts, which call for earnings per share (or EPS) of 40 cents by 2025. Mature fintech stocks trade for 20 to 25 times earnings. Best case scenario, SOFI could return to the high single-digits over the course of several years. A return to anywhere near its past all-time high (nearly $25 per share) does not appear likely.

Taking everything into account, from the possibility student loan-related buzz fades, to the risk headwinds persist, and that a recovery happens slowly, SOFI stock remains a risky play worth skipping out on.

SOFI stock earns a D rating in Portfolio Grader.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.