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.
The completed merger 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, where will Sofi stock be in 5 years time? This article will breakdown everything you need to know about the Sofi stock forecast for 2025.
Table of contents
Why are investors excited about SoFi’s 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. This represents an upside of 68% from the current trading price.
We have partnered with TradingView, click here to get access to Live data and Crypto charts
SoFi outperforms in previous quarters
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 the annual year of 2021.
The historic revenue growth can be attributed to a vastly growing customer base. For example, in the first quarter SoFi reported a 110% increase in members YOY. Furthermore, the company has maintained an average quarterly member growth rate of 67% over the past month.
SoFi forecasts revenue of $3.6 Billion by 2025
An SEC filing suggests the company forecasts its adjusted net revenue to hit $3.6 Billion by 2025. Over the next 5 years, SoFi expects revenue to grow at a CAGR of 43% according to an investor presentation in January.
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 revenue forecasts of $44 Million for this year.
Lastly, the company expects to generate a positive EBITDA for the first time in 2021. It is worth noting the above forecasts are from SoFi’s investor presentation, which should be treated with due caution as they are based on future variables.
Therefore, we can expect SoFi to continue to update their revenue visibility of cash flows as the company matures.
Chamath Palihapitiya sees high profitability in Sofi stock
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 IPOC’s Clover health have failed to deliver on shareholder returns. Hence, this will likely add additional pressure on SoFi to outperform in 2021.
“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,
The Bottom Line – Sofi stock forecast 2025
In conclusion, SoFi has proven to investors they can deliver on strong revenue guidance in recent 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.
Subscribe to our Youtube channel here.
We are now official partners with Tradingview
Firstly, Tradingview is a social network of 30 million traders and investors using the world’s best charts and analysis tools to spot opportunity in global markets. You can sign up to Tradingview by clicking the banner below. Tradingview allows you to follow your favorite assets, find trading ideas, chat with others, spot trends, and place trades directly on our charts.
Looking to start trading in Australia or the UK?
Do you live in Australia or the United Kingdom and looking to invest in the US market? Good news! We’ve partnered with Stake. Trade 4,500+ US stocks and ETFs with $0 brokerage and no fx fees per trade. Use our code “YIG” to receive a free stock when funding your new account.
In addition, Stake is one of the leading US trading platforms for Australian and UK investors. Click hereto start trading US stocks with a streamline trading experience. Lastly, for more information on our referral program and how it works click here.