SoFi Technologies Reports Strong Revenue Growth Amid ETF Launch
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Nov 16 2024
0mins
Should l Buy SOFI?
Source: Business Insider
SoFi Technologies Inc. has seen its stock price decline by 3.05%, hitting a 20-day low, as the broader market experiences mixed movements with the Nasdaq-100 down 0.27% and the S&P 500 up 0.02%.
The recent launch of the Direxion Daily SoFi Bull 2X ETF, which aims to deliver double the daily returns of SoFi stock, highlights the company's strong revenue growth of 37% year-over-year and a net margin of 17%. This ETF, while appealing to risk-tolerant investors, comes with a high expense ratio of 0.97%, which could impact long-term returns. Despite the stock's recent decline, SoFi's long-term growth potential remains strong, as indicated by its impressive 180% return over the past three years.
The implications of this ETF launch could attract more investors looking to capitalize on SoFi's growth trajectory, but they must also be cautious of the associated risks. The company's ability to maintain strong revenue growth and expand its customer base will be crucial for its future performance.
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Analyst Views on SOFI
Wall Street analysts forecast SOFI stock price to rise
14 Analyst Rating
5 Buy
6 Hold
3 Sell
Hold
Current: 15.870
Low
18.00
Averages
28.31
High
38.00
Current: 15.870
Low
18.00
Averages
28.31
High
38.00
About SOFI
SoFi Technologies, Inc. is a member-centric, one-stop shop for digital financial services. The Company, through its lending and financial services products, allows members to borrow, save, spend, invest and protect their money. The Company's segments include Lending, Technology Platform and Financial Services. The Lending segment offers personal loans, student loans, home loans and related servicing to help its members with a variety of financial needs. Its platform supports the full transaction lifecycle, including credit application, underwriting, approval, funding and servicing. The Technology Platform segment provides services through a diversified suite of offerings which include an event and authorization platform accessed via application programming interfaces, a cloud-native digital and core banking platform and services related to both platforms. The Financial Services segment offers a suite of financial services solutions, including SoFi Money and SoFi Invest.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Interest Earnings Calculation: With an average rate of 0.39%, depositing $1,000 would yield only $3.91 in interest after one year, whereas a high-yield account at 4% APY would generate $40.81, highlighting the significant advantage of high-yield accounts.
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- Mastercard Acquisition Move: Mastercard's acquisition of UK stablecoin company BVNK for approximately $1.8 billion aims to integrate cryptocurrency payments into its infrastructure, marking a strategic move into the digital currency space and ensuring it remains competitive in the evolving market.
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See More
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Market Trends: Following recent uncertainty, stocks have pulled back, with the Trump administration's pause in hostilities with Iran initially easing investor anxiety, but rising energy prices and inflation concerns are complicating the market outlook.
Investment Opportunities: Analysts are highlighting potential opportunities in various sectors, including energy stocks and companies like Advanced Micro Devices (AMD), which is expected to see growth due to strong institutional buying and planned product launches.
Stock Performance: Companies like Rivian Automotive and Tesla are under scrutiny, with Rivian showing quiet performance while Tesla faces regulatory challenges, impacting investor sentiment and stock prices.
Consumer Sector Insights: Retail stocks, particularly Gap and Macy's, are experiencing mixed reactions post-earnings reports, with some showing recovery while others face caution from investors regarding their future strategies.
See More
Analysis of Today's Savings Rates
- Current Rate Overview: According to the FDIC, the national average savings account rate stands at 0.39%, a significant increase from 0.06% three years ago, indicating a gradual recovery in the savings market despite still being lower than other investment returns.
- High-Yield Account Benefits: Some top savings accounts currently offer rates as high as 4% APY, such as those from SoFi and Valley Bank Direct, attracting savers seeking higher returns, which could lead to a shift of funds towards these high-yield products.
- Interest Earnings Calculation: With an average rate of 0.39%, depositing $1,000 would yield only $3.91 in interest after one year, whereas a high-yield account at 4% APY would generate $40.81, highlighting the significant advantage of high-yield accounts.
- Impact of Deposit Amount: Depositing $10,000 in a 4% APY account would result in a total balance of $10,408.08 after one year, earning $408.08 in interest, emphasizing the positive correlation between deposit amounts and earnings.
See More
Financial Stocks Struggle, Consumer Finance Takes Major Hit
- Consumer Finance Decline: Year-to-date, consumer finance stocks have plummeted by 21%, with Robinhood, Affirm, and SoFi down 39%, 40%, and 38% respectively, reflecting investor concerns over economic slowdown and rising credit risks, leading to a valuation correction for these previously high-performing stocks in 2025.
- Payment Processor Advantage: Visa and Mastercard, as the largest payment processors in the U.S., account for 76% of credit card transaction volume and 69% of cards in circulation, and due to their lack of credit risk exposure, they maintain stable cash flows during economic downturns, with expectations of double-digit earnings growth in 2026.
- Market Dominance: S&P Global and Moody's control 80% of the credit rating market, and with its strong positions in market intelligence and indexing, S&P Global has historically performed well under various market conditions, with a projected 5% increase in credit issuance in 2026.
- Analyst Optimism: 93% of analysts rate Mastercard and S&P Global as
See More
Financial Stocks Decline, Visa and Mastercard Stand Out
- Overall Financial Sector Decline: Financial stocks have dropped approximately 10% year-to-date, with consumer finance stocks suffering the most, down 21%, significantly impacting the entire financial sector.
- Visa and Mastercard's Market Position: As the largest payment processors in the U.S., Visa and Mastercard account for 76% of credit card purchase volume and 69% of all cards in circulation, and their lack of credit risk allows them to perform relatively well during economic downturns.
- Analyst Optimism for Visa and Mastercard: With 93% of analysts rating Mastercard as a 'buy' with a price target of $669, indicating a 34% upside, and 92% rating Visa with a target of $408, also suggesting a 34% potential gain, both companies are viewed favorably.
- S&P Global's Resilient Performance: As a dominant player in the credit ratings market, S&P Global, alongside Moody's, controls 80% of the market share, with a projected 5% increase in credit issuance in 2026, and its status as a Dividend King with 53 consecutive years of dividend increases underscores its financial strength.
See More
SoFi Closes Over $1 Billion Loan Deal with Global Bank
- Loan Platform Expansion: SoFi has closed a transaction with a leading global bank for over $1 billion in loans and established a new partnership with a top-five global private asset management firm, expected to deliver up to $2 billion over two years, indicating sustained strong demand for personal loans.
- Strategic Partnerships: The company is committing over $3.6 billion in personal loan delivery across three new partnerships, showcasing the unique value of its Loan Platform Business in effectively connecting borrower demand with institutional capital, thereby driving a capital-light, fee-based revenue model.
- Market Reaction Analysis: Despite the growth potential of SoFi's Loan Platform Business, its stock fell more than 3% on Thursday, reflecting mixed sentiments among retail traders regarding its expansion plans, with shares down 40% year-to-date.
- Strong Borrower Demand: SoFi's Loan Platform Business secured over $10 billion in commitments by 2025 to meet borrower demand, underscoring the company's competitiveness and adaptability in the personal loan market.
See More
Delta Airlines' Optimistic Outlook and Mastercard's Acquisition of Stablecoin Company
- Delta Airlines Guidance: Delta Airlines issued a first-quarter earnings guidance ahead of industry expectations, projecting EPS in the range of $0.50 to $0.90, despite rising fuel costs and adverse weather, indicating strong demand and revenue growth potential.
- Strong Industry Demand: With 90% of Delta's revenue derived from premium offerings and loyalty programs, the demand from high-income earners is driving the airline industry's recovery, and its maintenance business is expected to grow by 150% year-over-year, further enhancing the company's diversified revenue streams.
- Mastercard Acquisition Move: Mastercard's acquisition of UK stablecoin company BVNK for approximately $1.8 billion aims to integrate cryptocurrency payments into its infrastructure, marking a strategic move into the digital currency space and ensuring it remains competitive in the evolving market.
- Fintech and Traditional Finance Convergence: As fintech companies increasingly blend with traditional financial institutions, Mastercard's acquisition reflects heightened competition within the industry, with legacy financial firms actively adapting to emerging technologies to maintain market competitiveness.
See More
