SoFi Technologies (SOFI) has only been on the public markets since the end of May, when it went public via the SPAC route. Although the company was founded in 2011 and specialized at first in student loans, it has since expanded its remit to include a wide array of services, and if offers credit cards, investing through its online platform, mortgages, personal loans, and finance tools and services. So, a pretty varied business proposition.
That said, following a chat with CEO Anthony Noto, Oppenheimer’s Dominick Gabriele not only walked away “incrementally positive,” but the analyst also believes “many investors are only just beginning to understand the broad opportunities SOFI’s business model aims to capture.”
“Our biggest takeaway: SOFI has a clear, deliberate overarching strategy with a painstakingly thought-out road map, all with a clear focus on individual product return hurdles,” Gabriele summarized.
So, what differentiates this fintech player from the competition?
Well for one, its Tech segment boasts “richer APIs” when compared to other payment platforms, while in Financial Services, SOFI Invest provides robo advisory (i.e., an advanced computer algorithm that helps pick and manage investments), Money/Invest integration, custom ETFs and financial planning and career advice, offerings “other close peers” lack. Trading funds can also be accessed instantly via the Money product. Furthermore, Gabriele says because the loan business is integrated, it is “the only ‘Super App’ in the market.”
The company is also hoping to secure a banking charter for which it has already attained conditional approval, and which will ultimately allow for competitive Money interest rates and “enable longer-term expansion” into other lending verticals such as auto loans and refinancing.
Another area the discussion touched upon was the anticipated growth of the Tech Platform. While the 5-year revenue outlook breaks down into a mix of 40% Lending and 30% each for Tech and Financial, the present technology platform revenue forecast does not take into account the product expansion “already underway.”
All in all, Gabriele’s confidence is conveyed via an Outperform (i.e. Buy) rating and $23 price target. (To watch Gabriele’s track record, click here)
Looking at the consensus breakdown, barring one Hold, all 4 other recent SOFI reviews are positive, making for a Strong Buy consensus rating. In the year ahead, shares are anticipated to add 51% of muscle, considering the average price target clocks in at $24.50. (See SoFi stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.