San Francisco-based SoFi Technologies (SOFI) operates an all-in-one online personal finance platform. I am bullish on the stock.
Let’s face it: Millennials and Gen Z don’t bank like previous generations did. Younger bankers demand convenient, tech-enabled banking features from their smartphones.
Whether you think they deserve these conveniences is irrelevant. Millennials control vast sums of money nowadays, and Gen Z is also set to take a growing share of the personal-finance market.
In light of these considerations, it’s mind-boggling that SOFI stock is trading at its current share price.
So, let’s delve into the details and see if there’s really an irresistible bargain here. (See Analysts’ Top Stocks on TipRanks)
A Quick Look at SOFI Stock
It’s not every day that you’ll come across a stock with such a well-defined range.
In 2021, SOFI stock has bounced multiple times between the $15 support level and the $25 resistance level. It’s not an exact science, and these levels are approximate, but the stock is definitely tradable within that range.
As of early December, SOFI stock was down to $15 and change. Now, there’s no guarantee that the stock will bounce from there.
Yet, the stock market isn’t a place for guarantees. It’s a place to play the probabilities, and if you’re interested in neo-banking, SOFI stock could be a terrific addition to your portfolio.
A Growing Army
Here’s something to consider. Would it be accurate to call the young generations of app-based bankers an army?
That might sound like an exaggeration, but there’s definitely a low-key revolution going on in the personal-finance sector.
Traditional banks simply don’t provide a member-centric, one-stop shop for digital financial services like SoFi does. This company is a threat to old banks, and that’s not necessarily a bad thing.
SoFi’s strategy, according to CEO Anthony Noto, is to meet the members’ financial needs “for every major event in their lives, and all of the days in between.”
It’s a savvy strategy that has resulted in SoFi recording record revenue in 2021’s third quarter, as well as a fifth consecutive quarter of positive EBITDA.
That’s pretty impressive, considering that the “student lending environment remained depressed, and economic and market conditions remained volatile,” as Noto observed.
Join or Get Left Behind
The critics, who prefer to maintain the status quo of traditional banking, are really on the wrong side of the trade here.
We talked about neo-banking and its growing army of participants. SoFi’s third-quarter 2021 data proves that this is a revolution in the making.
Amazingly, SoFi had 2.9 million total members during the quarter. That’s an increase of 96% on a year-over-year basis.
It also represents 377,000 SoFi member additions, or a 35% increase, from the 279,000 members reported in the second quarter.
Interestingly, SoFi Money, SoFi Invest, and SoFi Credit Card drove 79% of the company’s new-member growth during the third quarter.
In other words, modern bankers are taking advantage of several of SoFi’s value-added services.
Wall Street’s Take
Turning to Wall Street, SOFI earns a Moderate Buy consensus rating based on five Buys and two Hold ratings assigned in the past three months.
The average SoFi Technologies price target is $25.43, implying 50.7% upside potential.
The Takeaway
It’s hard to resist SOFI stock as it trades near the bottom of a well-defined range.
Yet, it’s not all about the technical trade. There’s a movement happening now, and it favors new banking methods over the status quo.
Disclosure: At the time of publication, David Moadel did not have a position in any of the securities mentioned in this article.
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