SoFi has announced they will go public, and they give their investors the opportunity to buy shares before they go public. Should you look forward to this?
00:00 That is the question I would like to discuss in today’s video.
00:34 What is SoFi?
SoFi is the combination of the words Social Finance, based in San Francisco and it is an online provider of student loans, home mortgages, personal loans, credit cards and crypto currency trading and wealth management services.
The company was founded back in 2011 to provide student loan refinancing for millennials, now why was this a great market to be at, back then, there were over 1.2 trillion dollars of student loans in the US.
02:05 Is SoFi a good purchase?
The company has an $8.7 billion dollar valuation and is projecting to grow its membership and revenue at a pretty rapid rate.
Last year, SoFi purchased the fintech Galileo, a platform that helps other fintechs carry out front- and back-end functions such as account setup, account funding, and direct deposit, among other functions.
The whole idea with all of these products is for SoFi to create a “financial services productivity loop,” where customers that come to the company for one product end up using SoFi for their other financial needs. The more products that a customer purchases from SoFi, the more profitable the company becomes, because there is less spend required on customer acquisition.
04:06 Is SoFi capitalizing?
For SoFi to succeed in its strategy, it needs to grow members, show that it is cross-selling products to members, and also exhibit growth with Galileo.
In terms of membership, the company is doing well with 1.7 million members at the end of 2020 and expectations that it will grow membership to 3 million by the end of this year. The company also is seeing success in its cross-selling efforts, with 65% of its home loans coming from existing members.
Recently, SoFi announced that it plans to offer an auto loan refinancing option for its members because of customer demand and the high auto loan balances the company sees among its existing members. It’s good to see that the company can roll out new products quickly considering its strategy.
05:23 Will it meet the expectations?
The company has that valuation of $8.7 billion dollars, and it also has quite some aspirations. The company is projecting adjusted net revenue of $3.7 billion dollars by 2025.
SoFi also recently acquired the tiny Golden Pacific Bancorp, which will accelerate its goal of achieving a bank charter. The company expects the bank charter to significantly streamline operations very soon. This just means, all the purchases they are making, are all meant for growth
SoFi expects to first be profitable starting in 2023 and currently trades around $17 per share. Investors are going to watch how the company performs relative to its projections, but if it can hit its goals, the stock should be able to grow quickly.