San Francisco-based SoFi Technologies (SOFI) operates an all-in-one online personal finance platform. I am bullish on the stock.
Half a year after the company’s initial public offering (IPO), SoFi has been a trader’s playground but an investor’s headache. The company’s shares have gained and lost value multiple times, causing a seasick feeling along with major disappointment.
However, investing is a game that rewards people for patience, and a patient strategy with SOFI stock could pay off big-time this year. Even as the share price hovers near its all-time lows, SoFi is a company in hyper-growth mode, exhibiting a 96% year-over-year membership increase in 2021’s third quarter.
Even beyond the company’s outstanding membership growth, there’s a compelling reason to consider a long position in SOFI stock now. With a recent, game-changing announcement, SoFi’s critics should consider joining the bull camp in 2022 as a stock-price breakout may be imminent.
A One-Stop Shop
Founded in 2011, SoFi has been a disruptive personal-finance app for years. It’s no secret that the company poses a major threat to old, big banks as younger generations increasingly turn to app-based banking.
By the end of 2021’s third quarter, SoFi’s total membership had ballooned to 2.9 million. It seems as if SoFi wants to eliminate its big-bank competitors entirely, as the company “solidifies itself as a one-stop shop for digital financial products that meet all of our members’ financial needs throughout a lifetime.”
As we’ll discover momentarily, Wall Street’s analysts are fairly bullish on SoFi. Perhaps they envision a bright future for SoFi’s brand of disruptive banking, even if some investors don’t see it yet.
For example, Wedbush analysts recently initiated coverage of SoFi with an Outperform rating and a $20 price target. With the share price recently hovering near $12, Wedbush’s target would imply significant upside over the next 12 months.
Moreover, the Wedbush analysts believe that since SoFi is a one-stop shop for financial services. Wedbush said, “This is a significant competitive advantage over neobank competitors that tend to focus on niche offerings rather than the full financial picture.” In other words, both old-school and new-school banks will be threatened by SoFi.
Investors Can Bank on This
Even as SoFi has made huge strides in its membership count, the company still had limitations in its ability to help people manage their finances.
That’s because, technically speaking, SoFi wasn’t really a bank. Getting a banking charter in the U.S. would help the company to offer a broader range of services to SoFi’s current and future clients.
This major milestone was achieved as SoFi finally received approval from the Office of the Comptroller of the Currency (OCC) and the Federal Reserve to become a national bank.
With this, hopefully, SoFi won’t have to rely on partnerships with FDIC-insured banks anymore to hold customer deposits and issue loans.
Marking this momentous occasion, SoFi CEO Anthony Noto explained the benefits of the banking charter.
The company will “be able to lend at even more competitive interest rates and provide our members with high-yielding interest in checking and savings,” Noto clarified.
Becoming a national bank “will also enhance our financial products and services to ensure they efficiently meet the needs of our members, business partners, and communities across the country,” the SoFi CEO added.
Wall Street’s Take
Turning to Wall Street, SOFI earns a Moderate Buy consensus rating based on seven Buys and three Hold ratings assigned in the past three months. The average SoFi Technologies price target is $20.30, implying 66.9% upside potential.
The Takeaway
A number of Wall Street analysts envision higher prices for SOFI stock in 2022, it seems. This makes the stock more attractive, especially after six months of choppy, disappointing price action.
SoFi is underappreciated among investors, while the experts are largely bullish.
Meanwhile, SoFi is starting a revolution in the banking sector – and by becoming a national bank, SoFi can make bigger changes to the industry and help even more people make the most of their money.
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