Like many of its peers in the fintech sector, Sofi Technologies (SOFI) stock has been taking a hammering over the past few months. However, that all changed on Wednesday, after the company was granted the long-hoped-for U.S. banking charter by the Office of the Comptroller of the Currency.
The much-needed sentiment boost could help kick off a turnaround and Wedbush’s David Chiaverini believes the final hurdle cleared on the path to becoming a bank should “accelerate earnings growth.”
However, that is not the only thing the banking disruptor has going for it. “The company is a one-stop shop for financial services and this is a significant competitive advantage over neobank competitors who tend to focus on niche offerings rather than the full financial picture,” the 5-star analyst said.
SoFi is also well-positioned to compete with legacy consumer finance providers due to its “streamlined product offering,” while a younger age group are also more likely to be attracted to the company rather than traditional banks, who are seen as out of date, unfriendly fee-wise, and given their business segments often “operate in silos,” often have “friction” in the cross-selling process.
In contrast, SoFi has a competitive advantage, due to its integrated technology platform Galileo, which provides a “seamless cross-buying experience aimed at a digitally native younger cohort.”
Moreover, the company has been growing at a fast pace and is expected to continue doing so. In 4Q21, members crossed the 3 million threshold, well above the 1.7 million notched a year ago and far above the 1 million of two years ago.
Likewise, revenue growth has been impressive; from $600 million last year and $450 million beforehand, the company has guided to almost $1 billion of revenue in FY2021E.
While SoFi has a five-year plan in place, which Chiaverini thinks might be “overly optimistic” (the revenue forecast for 2025 is $3.7 billion compared to Chiaverini’s $2.9 billion estimate), the analyst still anticipates a CAGR of 28% over the next five years, an “exceptional level of…