SoFi Technologies (SOFI) is a rapidly expanding fintech company, which has seen strong buying in its stock in the recent past.
Further, its multiple growth catalysts indicate that SoFi’s long-term prospects remain bright.
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Growth Vectors
There’s a lot to like about SoFi, including its diversified business mix, continued strength across business segments, acceleration in new products, and strong customer growth rate.
Further, its integrated financial services platform supports the cross-buying of its products by existing customers, which drives average revenue per user. Meanwhile, its lower customer acquisition cost cushions margins.
During the recently concluded quarter, SoFi added 377,000 new members to its platform, implying year-over-year growth of 96%. Moreover, its total cost-per-member declined on a quarter-over-quarter basis. Loan originations remained strong, while Galileo (its technology platform) added 13 new clients.
While SoFi’s business is growing fast, it is awaiting the approval of its bank charter, which is likely to accelerate its growth and support margin expansion.
In response to SoFi’s pending bank charter, John Hecht of Jefferies stated that it should provide SoFi the opportunity to expand EBITDA, lower its cost of capital, and drive NIMs (net interest margins) from LT (long-term) loans.
Hecht remains upbeat on SoFi stock and expects strong customer growth to drive its revenues, margins, and cross-selling opportunities. He has a Buy rating on SoFi stock and increased his price target to $26 from $24 after its Q3 performance and upbeat guidance.
Website Traffic Signals Further Growth
Assessing website traffic provides a glimpse of the company’s future performance. While SoFi’s fundamentals remain strong, its website traffic trends signal that the momentum in its business will likely sustain in Q4.
Per TipRanks’ new Website Traffic tool, SoFi’s total website visit volumes jumped 49.7% in October. Moreover, it is up about 44.7% on a year-to-date basis.
Wall Street’s Take
Wall Street maintains a bullish outlook on SoFi stock. On TipRanks, SoFi has received five Buys and one Hold for a Strong Buy consensus rating. Moreover, SoFi scores a Perfect 10 from TipRanks’ Smart Score rating system, implying it will likely outperform the market averages.
The average SoFi price target of $25.58 implies 11.4% upside potential to current levels.
Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed in this article.
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