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No. of Recommendations: 2
benefit from Robinhood's bad PR moves around GME. Fintech stocks in general have done well, SoFi has a loyal following, have multiple levers in play for revenue growth, are backed by the well-known venture capitalist (Palihapitiya), and has a very member-focused strategy:

Initial PR for the SPAC:

"SoFi delivered over $200 million in total net revenue in the third quarter of 2020 and is on track to generate approximately $1 billion of estimated adjusted net revenue in 2021, representing year-over-year growth of approximately 60 percent, and full-year adjusted EBITDA profitability."

This is SoFi furthering their plan for a national bank charter, per recent PR:

"The proposed acquisition is a key strategic step in SoFi’s path to obtaining a national bank charter. As a result of the proposed acquisition, SoFi will switch its current de novo bank application to a change of control application. If successfully granted a national bank charter by the OCC and Federal Reserve pursuant to its change of control application, SoFi plans to contribute $750 million in capital and pursue its national, digital business plan while maintaining GPB’s community bank business and footprint, including GPB’s current three physical branches"

"SoFi is popular. It's been around for a little while, and it's interesting to see how these businesses evolved because it really started out as an alumni funded lending model that ultimately it was just helping students and graduates deal with student loans. It was something that was helping students deal with, student debt and it really has grown to be a full-fledged banking style operation here. I saw that with SoFi unlike Upstart (NASDAQ: UPST), here SoFi, has actually gotten conditional approval for its National Bank charter application."

"SoFi does have a big mortgage operation. We mentioned personal loans, the student loans, they just launched their credit card product on the lending side, they also have a high-yield savings platform, they have an investing platform where you can buy and sell stocks similar to a Robinhood, I would call it, but honestly doing a better job of educating the consumer and really bringing the community into the investing process, not just trading. They have a robo-advisor, there's an insurance division that partners with other insurance companies to offer products to their members. They have 1.8 million members. I mentioned that Upstart has done a little over 600,000 loans in its history, SoFi is 1.8 million members and all of these other products. A banking charter really makes sense for them."

"SoFi has been structured around three operating segments; (1) Lending; (2) Technology platform; and (3) Financial Services. Its lending arm constituted 83% of estimated 2021 fiscal year revenue. This deals with personal, home, and private student loans."

"This cross-selling of multiple financial products forms a major tenet for SoFi's bull case as it helps to boost revenue while minimising churn. This has been most highlighted in the 220% growth of their multi-product members from 125,000 as at the end of Q4 2019 to 400,000 as at the end of Q4 2020. The company estimates this will rise to 775,000 as at the end of the 2021 fiscal year, a 95% year-over-year increase."

"SoFi is on track to exceed 3 million members for 2021. This would be a year-over-year increase of 75%, a full 100 basis points more than the 74% increase of its FY 2020 over FY 2019."

"The accelerating growth in members runs contrary to the law of large numbers and points to growing momentum with their business model. Further, SoFi's investing app experienced a surge in downloads with the recent Robinhood debacle around blocked GameStop trades."

"SoFi's current price of $23.70 and 865 million shares outstanding place its revenue multiple at 22x using estimates for $980 million in revenue for its 2021 FY. As previously stated, I think SoFi is well placed to beat this revenue guidance. This should see the revenue multiple for its 2022 FY drop beyond the current 14x ascertained using the $1.5 billion forecast for the same year. The company's preliminary approval for a U.S. bank charter will also help meet the forecast for EBITDA profitability in 2021 by lowering their cost of capital and enabling increased net interest margin from holding loans longer."

Just mentions SoFi could benefit from exodus from Robinhood.

Noto said SoFi — which started in 2011 with a focus on student loan refinancing — has advantages as a fintech company that would allow it to offer “one of the highest interest rates in the marketplace.”

“When we have a bank charter, we’ll be able to determine what interest rate that we want to provide and not be dependent on anyone else,” said Noto, a former partner at Goldman Sachs and formerly chief operating officer at Twitter. “We have the capital and the financial model because we’re a digital company to provide a much more attractive interest rate on SoFi Money than we are providing today.”

Palihapitiya told CNBC that he “systematically tried to future out what was broken in banking” and concluded that “SoFi was the top of the list when I looked across all the companies” that could deliver the solution that potential customers wanted.

Anthony Noto Is a Solid Public Company CEO
When he joined SoFi as CEO, I thought Noto would be able to preserve what was good about the company and fix what ailed it. His executive role at Twitter and former position as a Goldman Sachs GS -1.1% managing director also boded well.

He was also former CFO of the National Football League and he has since cut a 20 year deal to call the Los Angeles football compound “SoFi Stadium” — which I hope pays off.

He has fixed SoFi’s culture, closed an acquisition to broaden its product lines and has made progress on getting a bank charter.

In November 2019, he described SoFi as a two year old company — since he said that he had set out to reinvent its culture. In a nutshell, Noto did this through “leadership alignment and accountability” for acting according to SoFi’s 11 core values, he told TheLadders.

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No. of Recommendations: 1
Great color, Dreamer. My cost basis on IPOE is $23.81, obviously purchased prior to recent decline. I appreciate your detective work on the company and C-suite. Even though I'm down I continue to believe this is a great company and with the banking charter should do even better.

Kind of like as Square is for small business, So-fi is for students...So-fi into Bitcoin at some point? (not...)

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No. of Recommendations: 5
Because of my prior military service I got my 19YO the golden opportunity to enjoy all access privileges to the local Credit Union. The rock star status of being a part of such a distinguished organization didn't rub off on him..... over the last few months he had $105 in overdraft fees. He called the credit union and kindly told them that he had the funds and pointed out that his savings account is where his $$ are kept and that could easily cover the overdrafts in his checking. They refunded ONE of the overdraft fees and said he could very conveniently link his two accounts and avoid the $35 overdraft. He said he would prefer to do that on his phone and they said - sorry, you have to fill out some paperwork to get the accounts linked. And they pointed out that once he made the journey to the local branch the overdraft would only be $5 instead of the $35 dollars he had been charged. At that point he ended the call and stormed off to his room.

After his friends laughed at him for having a 'physical Bank' and then howled hysterically about him having to fill out paperwork at the local branch they directed him to SoFi (Ally Bank was the other candidate). He told me thanks but no thanks to the platinum, elite, all access vibe at the credit union and moved all his money to SoFi.... and he has been laughing maniacally at my wife and I as we cowtow to the "Unacceptable, dishonest behavior of archaic banking systems".

Jamie Dimon was right - FinTech should scare the absolute bejesus out of old school banks and financial institutions. This generation will not deal with the nonsense that their parents grew up with..... They have better options.

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No. of Recommendations: 5
He told me thanks but no thanks to the platinum, elite, all access vibe at the credit union and moved all his money to SoFi.... and he has been laughing maniacally at my wife and I as we cowtow to the "Unacceptable, dishonest behavior of archaic banking systems".

Jamie Dimon was right - FinTech should scare the absolute bejesus out of old school banks and financial institutions. This generation will not deal with the nonsense that their parents grew up with..... They have better options.


great post.

reminds me of how I felt about debit cards. in my first job out of college, worked at a big company and was issued a corp card, and traveled quite a bit. If I couldn't charge it, I wasn't buying it. And I completely accepted that as being the simplest/easiest and most common sense approach.

Why the hell do I want to go to a cash station/ATM, then keep cash on me, including coin change?

Convenience is a powerful lure. So ecommerce isn't going anywhere either, but I think there is a balance and the pendulum swings in both directions until it finds a happy medium.

A new car, maybe, but buying a used car without ever sitting in it? No thanks.
Gonna buy a house without walking thru it...will a VR/3d walkthrough be enough? For me, the VR/3d gets me in the door to take a look in person.

But I am GenX, and at some point in the past couple of years a revelation hit me that my teenage sons don't watch any tv shows. Not a single show. I think they binge stuff once in a while...they will ask "hey, do we have Hulu right now?" when maybe they hear about a show from a friend. They game, and they watch YouTube, and talk about stupid crap online with friends while gaming or watching youtube. So while the collective investing world talks about CTV and streaming subscribers, part of me wonders who will be watching "tv shows" in 15-20 years. Quibi had the right idea but poor execution with "short form" as kids like that tiktok crap.

I grew up on Atari and arcades and a bit of Nintendo NES in college. They have these games I just stare at, where they stop constantly and select crap from inventory and then toggle five million times thru menus. I pretty much stopped keeping up with them when they were still too young to be good at Mario Kart and Mario Galaxy.

I went off on a tangent, but point is my GenX view of the world may not be all that relevant in another 10 years.

"Don't criticize what you can't understand
your sons and daughters are beyond your command."
-Bob Dylan

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No. of Recommendations: 3
Yo Cliff and Dreamer, I certainly appreciate your comments and thoughts here – particularly the story of your son’s rebellion ;)

We went through something similar here with my son who has a local CU account and was looking for something “better”. Given his “do most things mobile” approach to life we thought an online, FinTech, non-physical bank would be appropriate. Plus some of his friends have already made the move.

The problem? Cash deposits. My in-college son has 2 jobs while in school where most of his income is in cash. And he certainly does not want to keep a significant cash holding in his shared rental. We went through the options for him to handle his cash and he even called 2 of the options (Ally and 1 other) and both basically told him “Just deposit the cash into your CU checking account and then transfer it over” - to which my son thought "Why would I want 2 accounts?".
The other options were just as much work - such as buy a money order with the cash and then do a mobile deposit of the money order into the account.

In the end he decided to stay with the clunky physical local CU because he can deposit his cash via the ATM a mile from his rental and be done with it. A much less clunky solution.

Just to be clear, I agree with you (and Jamie) regarding the rise of FinTech. I also think that cash is slowly going by the wayside as the younger generations and post pandemic lifestyle are moving to mobile banking/transacting/etc. It has pretty much moved that way in China already - and a few other countries. But it is not there yet here in the US as we still have a fair amount of cash business etc.

So on one hand I believe if the online banks had a more efficient way of handling cash deposits, then they would gain even more customers in the US, Mexico, and other more cash oriented countries and grow faster. On the other hand, since cash is becoming less important to deal with they are not looking for (or investing in) a solution because the need to handle cash is in a slow decline. A financial catch-22?

I am long SoFi/IPOE, SQ, ARKF, and a couple other FinTech related positions.
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No. of Recommendations: 0
A GenX'r that can quote 60's Dylan??


I was so much older then,
I'm younger than that now...
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The problem? Cash deposits. My in-college son has 2 jobs while in school where most of his income is in cash.

I agree. That is not as much of an issue with us but it still poses a problem. My son is a full time student living at home because of COVID. If he does accrue cash he deposits with the Bank of Mom and Dad. Come to think of it that isn't very FinTech..... We Apple Pay it back to him or transfer it to his online account.

I also agree that the trend for young people will be a mostly cashless existence.

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No. of Recommendations: 2
So who is still in SoFi? (IPOE finally finished SPAC status and now trades as "SOFI")

They had a nice dip on Friday.
Was down to around $18.50

This still means 85% higher than from $10 SPAC floor, but down off highs.
Apparently some lockup pressure perhaps.

So a buying opportunity?

This SA article is pretty good/long, but is more about the story/thesis than a metrics deep-dive.
Covers the strong background of the CEO, the major business lines; loans, financial services (trading), digital banking (in progress). Mentions competitors are more like Square and companies that add services in the future, like perhaps Robinhood. Galileo is part of their technology arm, and is intriguing but a bit unclear to was a major purchase and they are a backend for digital banking. So does that mean there is a B2C aspect to SOFI and a B2B aspect?

"Enter Galileo, the backend, regulatory and technology side. Galileo offers these companies digital banking and payment services integration with their consumer-facing products. It maintains a ledger, authorization settlement, ACH, funds movements and fraud management, credit card issuance; everything needed to build a bank in a digital capacity. And these product companies are happy to outsource the backend to Galileo, who focuses only on that. In July of 2020, CEO of Galileo Clay Wilkes said 95% of digital banking in North America is run on Galileo, and 70 of the top 100 fintech businesses in the world are clients, such as Robinhood, Chime,, Monzo, Moneylion, Transferwise, Klar…the list goes on."

While very bullish, the author did throw out some "what could go wrong" scenarios, and one is that the Q1 influx of users from stimulus checks and disatisfaction with Robinhood over the GME issues, may be the peak, and that type of user growth won't be sustained.

"Amazingly, SoFi added 430k members to its platform in Q1, or 23% growth quarter over quarter from a base of 1.85 million. This is an astounding number, and represents the seventh consecutive quarter of accelerating year over year growth. As much as I like SoFi, this will be the last quarter of such growth.

Q1 2021 was not a normal quarter. It included several massive tailwinds for SoFi, including stimulus check disbursement and the well-publicized meltdown of the largest fintech equity trading platform, Robinhood (RBNHD). As trading of GameStop (NYSE:GME) and meme stocks like AMC (NYSE:AMC) were halted and clients became disillusioned with Robinhood, these same clients began to flock to alternative trading platforms, such as Square's CashApp (NYSE:SQ), Coinbase (NASDAQ:COIN) and SoFi. Accordingly, each of these three companies posted banner first quarters, which I believe represents a pull forward of growth rather than a new growth slope."

All in all, I was fairly impressed, and wish I took a longer look when they dipped during the drawdowns to around $15.

"Importantly, SoFi also reaffirmed FY2021 guidance of $980 million, or 58% year over year and adjusted EBITDA of $27 million. I believe these projections are achievable and represent some of the highest growth rates in the industry."

Optimistic view of future valuation
"Given SoFi's industry-leading growth rates it is reasonable to assume SoFi is granted a PE between Square and PayPal's ranges of 70 - 250. Where SoFi's PE actually settles dramatically impacts its market capitalization and therefore, its stock price. Within that range SoFi could sport a market cap of anywhere from $63 - 225 Billion in 2025. This is where math gets messy and the economists begin to fidget, but the take home message and what I firmly believe is that if you are long SoFi, Anthony Noto and his team will repay your trust with a multi-bagger."

Thoughts on SOFI? I think if we assume all stocks/peers are overvalued, SOFI doesn't appear too overpriced compared to some industry peers. A drawdown could squash them further, but they also seem to have a good future.

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Does SoFi still have that WeWork albatross around its neck?

That whole situation made me question who is making decisions and what the future looks like. Or am I just completely misremembering? That happens way too often.
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You thinking of Softbank...the investing company?

Totally different.
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Ok, just my faulty memory then.
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SOFI ER is Thursday 8/12 after bell.

Should be interesting, as Q1 was the momentum continuing, and how does forecast look, and any news on bank status.

I have small allocation.

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