Finance giant SoFi (NASDAQ:SOFI) officially began trading on June 1st after the completion of their merger with Chamath Palihapitiya’s SPAC venture (NYSE:IPOE). This merger marks just one of the six SPAC ventures Billionaire owner Chamath is pursuing in 2021. The completed merger has raised $2.4 Billion in cash proceeds for SoFi to carry out their expansion strategy in 2021 and beyond. With investors now wondering what the future holds for SoFi, this article will breakdown everything you need to know about SoFi’s stock forecast.
Table of contents
Who is SoFi and why are investors excited about its future on Wallstreet?
Firstly, Social Finance (SoFi) is a next generation financial service provider based in California, United States. The company offers “services in a single app that empowers members to borrow, save, spend, invest and protect their money”. The company now boasts over 2 Million members and expects to generate $980 Million in net revenue this year.
SoFi’s rapid growth is driving high interest from Wallstreet including analysts at Rosenblatt Securities who set a price target of $30 a share. The average 12 month price target from analysts currently sits at $27.50, which represents an upside of 71% from the current trading price.
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SoFi delivers strong revenue guidance
Firstly, the Q1 earnings have shed light on SoFi’s recent financial performance. For example, SoFi generated a net revenue of $216 Million in Q1 2021 which beat guidance by 10.7%. Analysts are confident that Sofi will continue to deliver strong results for the remainder of the year. Analysts forecast SOFI to generate $981.74 Million for 2021.
The strong revenue growth can be attributed to an additional 1.2 million members forecasted to join in 2021. Furthermore, an SEC filing suggests the company forecasts its adjusted net revenue to hit $3.7 Billion by 2025. However, more importantly the company expects to generate a positive EBITDA for the first time in 2021 which is a green light for long term shareholders.
Chamath Palihapitiya sees growth opportunity in SoFi
Investors have seriously rallied behind the SPAC mergers pursued by CEO Chamath Palihapitiya. The general consensus is Social Capital Hedosophia are targeting innovative, high growth companies. This provides investors an opportunity to invest in high growth stocks early, hence driving interest in these companies.
However, the bears argue the slump in other completed mergers by Chamath Palihapitiya including Clover health have failed to deliver the returns expected after going public. We will see over the next few months if SoFi can deliver on its anticipated stock growth potential.
“SoFi’s innovative, member-first platform has demystified financial services for millions of Americans and simplified the process for those looking to apply for loans, invest their money, obtain insurance and refinance their debt, among many other tasks that were previously arcane and needlessly complicated. Additionally, the acceleration of cross-buying by existing SoFi members has created a virtuous cycle of compounding growth, diversified revenue and high profitability.”Chamath Palihapitiya, Founder and CEO of Social Capital Hedosophia V,
I am obliged to remind our viewers that this article is not financial advice but rather investment commentary from extensive research.
In conclusion, SoFi has proven to investors they can deliver on strong revenue guidance in the Q1 earnings. In addition, the strong revenue outlook for SoFi is promising and likely a primary driving force in interest across the investor community. However, we have seen the associated volatility with SPAC companies after merger completion. Therefore, investors should expect to see further volatility as we move through this year.
Written by Tyger Fitzpatrick, Founder of Youth Investment Group.
The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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