SoFi stock (NASDAQ:SOFI) has had an interesting year in 2021. It is one of the few SPAC mergers that has been able to produce any sort of meaningful gains, and one of the only ones that has outpaced the S&P 500 year to date. It seems like it was just last week when the SPAC industry was booming, and anything that Chamath Palihapitiya touched was turning to gold.
Fast forward a few quarters and some of his mergers like Clover Health (NASDAQ:CLOV) is trading below the $10.00 PIPE price, and has been relegated to a glorified meme stock. OpenDoor Technologies (NASDAQ:OPEN) has had a decent run since it debuted, but the stock is still trading at a loss in 2021.
SoFi Technologies seems to be the exception thus far, and Chamath’s first venture into the Fintech industry looks like it will be a successful one. Shares of SoFi have been gaining momentum throughout the year, and are up over 63% in 2021, and over 90% over the past 52-weeks.
The fintech space is incredibly popular right now, with many people drawing comparisons to heavyweights like Square (NYSE:SQ) and PayPal (NASDAQ:PYPL). With a market cap of just under $16 billion, those two companies offer SoFi a lucrative blueprint if the young fintech company can make the right decisions. Here’s what investors need to know about the SoFi Stock Forecast with the potential of full Bank Charter approval.
Banking Charters and Galileo
The major catalyst SoFi investors are waiting on, is when the company receives a banking charter approval. This charter would give SoFi the freedom to operate on a national scale, and not have to abide by each state’s jurisdictional regulations. SoFi applied for a national bank charter back in July of 2020, and was granted conditional approval in October of the same year.
The company hopes to receive its full charter by the end of 2021. This would open up the lending market to SoFi, which of course is one of the most lucrative segments for any chartered bank. So how does this effect the SoFi stock forecast? With Banking Charter approval, the company forecasts an additional $193 Million in EBITDA to their income statement in 2022 alone, assuming the charter is approved at the end of the calendar year.
Adding to SoFi’s future potential, is the continued growth of its Galileo users. SoFi stock saw nearly 120% year over year growth in accounts in the second quarter, and with the third quarter earnings report set for early November, the market will be anticipating another major leap for the platform.
When combining the two segments, SoFi is clearly taking the path that Square is on, integrating the technology platform with traditional, legacy banking services. Square is now a $120 billion company, and its emerging industry has room for innovative competitors.
SoFi stock approaches street high target after rally
Midway through September, Mizuho analyst Dan Dolev initiated coverage on SoFi stock with a Buy rating and $28 price target. The analyst highlighted that SOFI is in the “midst of a powerful transition to a full-fledged mobile-first, super-app neo-bank”. The analyst added that this transition will “accelerate a virtuous cycle” of increased engagement, revenue and profits. Lastly, Dolev sees a viable path to a 40% sales growth by 2025 which is consistent with SoFi’s forecasts.
Dolev’s base case model forecasts SoFi generating $1.5 billion in sales in the year 2022 and $2.1 Billion by 2023. The good news for investors is that the analyst also sees net losses shrinking by 2023, with GAAP profitability potentially arising in 2024 according to Mizuho’s base case valuation.
SoFi Technologies expects Business to Customer Revenue to skyrocket to $1 Billion in 2025
An SEC filing from IPOE & SoFi early this year forecasts the combined companies adjusted net revenue to hit $3.6 Billion by 2025. SoFi also expects business to consumer (B2C Financial services) revenue to grow to $1 Billion by 2025, which is a major step up from its current B2C annual revenue guidance of $44 Million for this year.
Correlation between Mizuho’s base case and SoFi’s forecasts is a good sign for investors, however Dolev’s valuation is currently the highest on Wallstreet. For a fair comparison we can compare revenue forecasts with the remainder of Wallstreet. Across the board of 7 Wallstreet analysts, the average revenue forecast for 2022 currently stands at $1.45 Billion which is only $50 million shy of Mizuho’s.
The Bottom Line – SoFi Stock Forecast
SoFi is fresh off a stock upgrade from Morgan Stanley which raised its outlook to $25 per share back in September. The company is branching out into multiple different segments, including beefing up its lending services, as well as introducing investment options in stocks and even cryptocurrencies. Of all the SPAC companies that Chamath has brought to the equity market, SoFi holds the golden stamp of approval from Wallstreet.
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The content above is strictly for informational purposes only and is not financial advice nor does it constitute a recommendation. 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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