Major Catalysts for the SoFi technologies Weekly
"Tell me where you can find a
bank that's going to give you 40% to 50% revenue growth and expanding
Investment Partners' Joe Terranova said Wednesday.
comparing SoFi Technologies to other banks, the company's prospects really stand out.
Terranova said, and that he owns shares and has no plans to sell because SoFi
offers the opportunity to own a bank that also has the
characteristics of a growth stock.
much-needed sentiment boost could help kick off a turnaround and Wedbush’s
David Chiaverini believes the final hurdle cleared on the path to becoming a
bank should “accelerate earnings growth.”
that is not the only thing the banking disruptor has going for it. “The company
is a one-stop shop for financial services and this is a significant competitive
advantage over neobank competitors who tend to focus on niche offerings rather
than the full financial picture,” the 5-star analyst said.
SoFi Technologies is also
well-positioned to compete with legacy consumer finance providers due to its
“streamlined product offering,” while a younger age group are also more likely
to be attracted to the company rather than traditional banks, who are seen as
out of date, unfriendly fee-wise, and given their business segments often
“operate in silos,” often have “friction” in the cross-selling process.
SoFi has a competitive advantage, due to its integrated technology platform
Galileo, which provides a “seamless cross-buying experience aimed at a
digitally native younger cohort.”
the company has been growing at a fast pace and is expected to continue doing
so. In 4Q21, members crossed the 3 million thresholds, well above the 1.7
million notched a year ago and far above the 1 million of two years ago.
revenue growth has been impressive; from $600 million last year and $450
million beforehand, the company has guided to almost $1 billion of revenue in
While SoFi Technologies has a five-year plan in place, which Chiaverini thinks might be “overly
optimistic" (the revenue forecast for 2025 is $3.7 billion compared to
Chiaverini’s $2.9 billion estimate), the analyst still anticipates a CAGR of
28% over the next five years, an “exceptional level of growth,” which should
see the company attain revenue of $3.5 billion by 2026.
Chiaverini initiated coverage on SOFI shares with an Outperform (i.e. Buy)
rating and $20 price target. Investors could be pocketing gains of ~46%, should
the analyst's forecast hit the mark over the next 12 months.
already firmly in the past, but on Wall Street, the year won’t be truly over
until companies report 4Q21’s financials. That said, when SoFi Technologies steps
up to the earnings plate next month, Morgan Stanley’s Betsy Graseck believes
all eyes will be on the outlook for 2022.
showing ~60% top-line growth in 2021, Graseck believes the bears are “skeptical
of strong revenue growth continuing, looking for a sharper slowdown in 2022.”
no SoFi Technologies bear, but also anticipates growth will slow down, expecting around 40%
growth in 2022e, with adjusted 2022e revenues hitting ~$1.42 billion. The
analyst sees 2022e EBITDA reaching $164 million as EBITDA margins expand to
11.5% from 3.0% in 2021e.
“forthcoming boost” for student loan refi originations will get another 3-month
delay due to President Biden's extension of the federal student loan moratorium
to May 1. To account for the delay, Graseck had already reduced her student
loan refi forecast, and now predicts $5.1 billion of SLR originations in FY22.
Graseck’s outlook presumes a return to a pre-COVID run-rate of $2 billion a
quarter does not occur before early 2023.
since SOFI last reported earnings in November, interest rate expectations have
“risen,” which Graseck says puts a dampener on gain on sale margins from here
each of the past 3 quarters, SOFI has managed to double its total member base
on a year-over-year basis, which along with product growth, Graseck believes is
an “important leading indicator for the forward revenue growth trajectory.” For
the quarter, the analyst expects 10% sequential growth and a 74% uptick from
the same period last year, with members reaching 3.2 million. Member engagement
should also “continue to increase,” with products per member growing from 1.45x
to 1.49x, exhibiting year-over-year total products growth of 90% and landing at
To this end,
Graseck reiterated an Overweight (i.e., Buy) rating for SOFI, although the
shares get a new price target as the figure drops from $22 to $20.
“The moment we have all been waiting
for has finally arrived,” wrote Rosenblatt Securities analyst Sean Horgan. He anticipates that
consensus estimates will “move substantially higher” once analysts factor in
the expected financial benefits of the charter.
“Specifically, we are incrementally
bullish on 2022 top-pick SOFI given both the direct benefits
(i.e., lower cost of capital, increased NIM [net-interest margin]) and indirect
benefits (i.e., rising interest rates) of becoming a national bank,” he wrote.
have come under pressure in recent months, falling 31% over a three-month span
as fellow newly public fintech players Robinhood Markets Inc. (down 65%) and
Marqeta Inc. (down 45%) have suffered rough stretches as well. But SoFi could
be in a position to separate from that crowd in time, Oppenheimer analyst
Dominick Gabriele wrote, by winning more traction with institutional investors.
“Some investors were skeptical of
SOFI’s ability to obtain this charter and thus this likely is an upside
surprise,” he wrote.
Gabriele called the charter “a
significant and tangible checkpoint in achieving SOFI’s ultimate goals of
further consumer engagement and the competitive advantages SOFI ultimately
looks to obtain.”