💳 Is SoFi Trying To Be The One-Stop Financial Shop?

CureVac shares tank ⬇ Kindered Bio to be acquired.

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💳 SoFi: The One-Stop Financial Shop?

Social Finance or SoFi (SOFI) went public on June 1 after being acquired by Chamath Palihapitiya’s SPAC. Its $8.6B valuation is comparable to that of money transfer service Western Union (WU). SoFi, however, is shooting for the stars, as it brings the battle to financial services giants on their own turf. (Tweet This)

Eggs In Different Baskets

SoFi was founded in 2011 by students of Stanford University. The idea was for the university alumni to contribute funds which would be disbursed as student loans. Within a year of its inception, SoFi became the first company to help students refinance both federal and private student loans.

The company diversified its product portfolio by launching mortgages in 2014 and personal loans in 2015. The same year, it became the first FinTech to raise $1B in Series E funding led by Softbank for a valuation of ~$4B.

Since then, SoFi has further diversified its product offering to include online brokerage, cash management, credit cards, and insurance products – all of this on your mobile device, at your fingertips.

Courtesy of SPAC King Chamath Palihapitiya, SoFi went public at the start of the month. Shares rose 12% on its trading debut.

Competing In The Big League

In preparation for its going public, the company released its quarterly performance numbers.

Q1 2021 Key Figures:

Revenue: $216M (151% growth Y-o-Y) Vs. management guidance of $195M

Adjusted EBITDA: $4.1M (compared to -$66.2M Y-o-Y) Vs. management guidance of -$5M

For the full year, revenue is expected to touch $980M and adjusted EBITDA of $27M. The company expects net revenue to cross $3.6B by 2025, with much of the growth coming from B2C lending.

Last year, SoFi acquired digital banking services provider, Galileo Financial Technologies for $1.2B. Galileo adds further heft to SoFi’s formidable offering with its 70M accounts. Galileo had added 11M new ones during the quarter.

In order to accelerate its National Bank charter application, it acquired Golden Pacific, a community bank in California for $22.3M in March. SoFi is expected to capture a significant piece of the online lending pie.

These developments have not gone unnoticed by Street experts. One firm initiated coverage on the stock with a buy rating yesterday with a price target of $30 per share, ~40% upside from current levels.

However, competition in this space is tough. Behemoths such as JPMorgan Chase and regional players such as PNC Financial Services offer products that are quite similar to SoFi’s. The question then boils down to whether SoFi has taken rapid strides in positioning itself in front of millennial customers who will be the key drivers of its different businesses. As of now, it seems SoFi, so good!

Market Reaction
Shares of SOFI ended at $21.83, up 4.95%.

Company Snapshot 📈

SOFI $21.83 +1.03 (4.95%)

Analyst Ratings (03 Analysts) BUY 67%  HOLD 33%  SELL 00%

Newsworthy 📰

Trial: CureVac Covid vaccine only 47% effective in early data, shares tank (CVAC -45.67%)

Test: FAA mandates Boeing 737 MAX inspections for key automated flight systems (BA -1.73%)

Takeover: Elanco announce agreement to acquire Kindered Biosciences for approximately $440M. (KIN +45.58%)

Later Today 🕒

  • Adobe Inc. Earnings (ADBE)
  • Kroger Co. Earnings (KR)
  • Jabil Inc. Earnings (JBL)
  • 6:00 PM IST: Initial Jobless Claims
  • 7:30 PM IST: Index of Leading Economic Indicators

Fun Fact of The Day 🌞

64% consumers have made a purchase decision based on social media content

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