Fintech company SoFi Technologies (SOFI) is expected to growth at 45% CAGR until 2025, while still trading at a decent valuation price. The combination of its standing as a market leader company, its strong management team and its collection of Tier One shareholders, while operating in a blue ocean total addressable market, makes me believe that SoFi will beat the expected forecast. I expect the stock to create long-term value for its shareholders in the next several years.
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SoFi began its journey in 2011, as a platform for student loan refinance. The company recognized a vacuum and inefficiencies in the student loan market, of which SoFi knew how to take advantage. After the company became a market leader, it began to expand its mix of products. As for today, SoFi is considered a “one stop shop” or “Super App” in the fintech sector.
SoFi operates mostly in the Digital Landing, Neobank (financial products) and Baas (banking as a service) sectors. The rapid growth in the number of services that its clients use indicates that the company is proficient at improving its value proposition by adding best-in-class products. In addition, the company consistently displays its ability to monetize by improving its ARPU due to SoFi’s strategy of cross-selling.
In the Landing segment, the company differentiates itself with its unique underwriting model, which is based on Ai technology and Big Data. The segment is expected to grow by 30% CAGR in the upcoming years, and already generates nice margins.
In the Neobank segment, the company mainly provides trading platforms, insurance (through 3rd parties such as Lemonade (LMND) and Root (ROOT)), savings accounts, checking accounts, and more, through a third-party company. In this segment, the company expects growth at 9 times above the industry average (17% against SoFi’s 150%).
In the Technology platforms segment, SoFi provides the infrastructure for its clients through Galileo. Galileo provides white label card issuing, processing, management service, fraud detection and more in a Banking as a Srvice model (Baas). Galileo serves 95 of the world’s largest Neobanks, including Chime, revolut, Monzo, Shipts, Robinhood (HOOD) and more.
The company’s management has rich experience in the technology and financial sectors, and includes managers who have shown impressive results in the largest companies in the world in their previous positions. Moreover, its shareholders comprise some of the largest private equity and venture capital funds. I believe that the company has all it take to be one of the most successful corporations in the world.
TipRanks’ Traffic Tool
Data from TipRanks’ Website Traffic Tool confirms the company’s recent success. According to the tool, which uses data from Semrush (SEMR), the number of unique visits to SoFi’s website has risen significantly.
Compared to the same quarter last year, total unique visitors on all devices are up 54%. Additionally, total unique visitors to the site year-to-date are up more than 60% over the same period of time in 2020.
Disclosure: At the time of publication, Orel Levy had a position in SoFi.
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