SoFi stock (NASDAQ:SOFI) had an interesting year in 2021. It was one of the few SPAC mergers that has been able to produce any sort of meaningful gains in 2021. It seems like it was just last week when the SPAC industry was booming and anything that Chamath Palihapitiya touched turned to gold.
Fast forward a few quarters and some of his mergers like SoFi are now trading below their PIPE offering price at $10. While SoFi’s stock price remains in the clutches of market bears, the companies internal operations continue to grow. Here’s the SOFI Stock Forecast.
How is SoFi Stock is currently tracking in 2022?
SoFi Technologies seems to be following a similar path as the tech sector is hammered on inflationary and Ukraine-Russia concerns. Nevertheless, internally Chamath’s first venture into the Fintech industry looks like it will be a successful one. Shares of SoFi rebounded by 5% as the market bounced back from heavy losses. SoFi stock is currently trading 28% lower in 2022, highlighting the unforgiving nature of the bear markets.
The fintech space has gained significant popularity in recent years. So much so that SoFi has people drawing comparisons to heavyweights like Square (NYSE:SQ) and PayPal (NASDAQ:PYPL). With a market cap of just under $7 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 over the coming months.
SoFi Becomes a Bank, Acquires Competition
The major catalyst SoFi investors were waiting on, is when SoFi would become a Bank. On Janaury 18, SoFi confirmed they have been approved to become a Bank Holding Company through its proposed acquisition of Golden Pacific Bancorp. SoFi will now be able to operate its bank subsidiary under the name SoFi Bank, National Association. SoFi expects the acquisition to close this month, subject to completion or waiver of the remaining customary closing conditions.
“With a national bank charter, not only will we be able to lend at even more competitive interest rates and provide our members with high-yielding interest in checking and savings, it will also enhance our financial products and services to ensure they efficiently meet the needs of our members, business partners, and communities across the country, while continuing to uphold a high bar of regulatory standards and compliance.”said Anthony Noto, CEO of SoFi.
This charter gives SoFi the freedom to operate on a national scale. Furthermore, SoFi does not have to abide by each state’s jurisdictional regulations regarding Banking practises. This approval also opens 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.
SoFi Continues to Expand its Business
Adding to SoFi’s future potential, is the continued growth of its Galileo users. Galileo is a Utah-based payment processor, which connects banks to credit card processors through application programming interface software (API’s). Galileo netted the company $50 Million in Q3, with 13 additional clients added this quarter alone.
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.
In addition, SoFi recently announced its plans to acquire Technisys, a leading cloud-native, digital multi-product core banking platform. SoFi noted the acquisition of Technisys adds a “unique, strategic technology and business for SoFi in pursuing its ambition to provide best-of-breed products as a one-stop-shop financial services platform”.
Furthermore, the acquisition will also accelerate SoFi’s three-year revenue CAGR. The acquisition is expected to add a cumulative $500-$800 million of revenue synergies over the next 3 years. SoFi’s aggressive expansion as a one stop shop for all of its customers financial needs is beginning to take hold, and we can see why investors are excited. SoFi stock jumped 14% after hours following the technisys acquisition announcement but soon returned to trading below $10.
Is SoFi Technologies a buy right now? Here’s what Bank of America Had to Say.
Bank of America analyst Mihir Bhatia recently started coverage on SoFi Stock with a Buy rating and $17 price target. Bhatia noted that the company’s vertically integrated initiatives and member growth are expected to drive strong revenues through to 2024. The analyst estimates that SoFi’s revenues will grow 40% annually through to 2024. Bhatia adds that SoFi’s Q4 results should provide more clarity on its “near-term catalyst potential”.
Mizuho analyst sees long term potential in the Sofi Stock Forecast
Midway through September 2021, 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. The analyst sees 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 over 3 years
An SEC filing from SoFi in 2021 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 in the same year, 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.
Morgan Stanley Raise Concerns Over Possible Extension of Student Loan Moratorium
Last week, Morgan Stanley analyst Betsy Graseck downgraded the SoFi Stock Forecast to Equal Weight with a price target of $10, down from $18. The analyst is practising some caution on SoFi as the company is at risk of another extension of the federal student loan moratorium, which has the potential to “bleed into” 2023 and beyond.
Graseck’s reduced target reflects the “key” moratorium student loan moratorium catalyst being taken off the table this year. For those unaware, the U.S. government has allowed federal student-loan borrowers to suspend making payments and waived interest on their loans due to COVID-19.
The Bottom Line: SoFi Stock Forecast
SoFi is fresh off a stock upgrade from the BoA which raised its Sofi Stock forecast to $17, suggesting an upside of 90%. The company is branching out into multiple different segments, including beefing up its lending services.
In addition, SoFi is also 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 despite its recent downtrend.
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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.