3 weeks SOFI the next multi-millionaire stock Reddit      

Disclosure: This is not financial advice and this is my personal opinion on the stock. You take full responsibility for your own action.

Full disclosure on position:

600 shares @ $18.14

3 reasons to invest in SOFI?

1. Anthony Noto

Former Twitter executive and managing director at Goldman Sachs. He improved SoFi's negative culture, completed an acquisition to extend SoFi's product range, and made headway toward obtaining a bank charter.

Noto brought with him a track record of discipline and credibility that SoFi lacked. Noto persuaded the board to abandon loan volume targets that emphasized number over quality, leading in significant capital burn.

He oversaw SoFi's shift from a lender to the first "one-stop shop" in digital finance, in addition to making it leaner and meaner. He swiftly launched products in investing, saving, credit, and other areas to increase cross-selling and SoFi's value to users. To broaden its appeal, the firm continues to release new goods on a regular basis.

SoFi's CEO is a star

Since taking over as CEO of SoFi, Noto has consistently set lofty goals and then met them. His track record is impeccable, and the early results he has produced are simply outstanding. Strong leadership is one of the most difficult and crucial decisions for a new firm after its redesign, and SoFi has nailed it.

2. Galileo Financial Technologies

Galileo is the top provider of infrastructure services to the world's leading financial firms, thus being able to distribute these goods via enterprise level API will allow them to expand alongside and support their existing clients' product roadmaps.

Galileo is the undisputed monarch of the Banking-as-a-Service (BaaS) ecosystem. Let us describe this jargon. BaaS is a fintech infrastructure that helps to decrease the time and expense that fintech businesses spend on obtaining regulatory needs or licenses. As previously said, BaaS gives new digital banks and start-ups third-party access to key systems and functions, allowing them to incorporate digital banking and payment services into their own offering. BaaS decreases the technical needs and skills necessary to deliver financial goods, such as keeping account ledgers for various customer accounts, which a typical bank must do. Consider how Cloud and SaaS Tech companies provide services to ordinary businesses on a large scale to comprehend BaaS. BaaS accomplishes the same for nascent Fintech firms.

Galileo is crucial to the BaaS revolution. Galileo's BaaS platform offers considerable cost reductions and should continue to play an important part in the future of Fintech since tiny challenger banks benefit from lower client acquisition expenses, and Galileo supplies nearly everything they want. The diagram below depicts all of the firms that supply BaaS services that fuel the majority of the Fintech industry today. Stripe is one such example and a major player in this ecosystem.

Galileo's robust payment processing platform makes it simple to develop sophisticated payment card programs and digital banking solutions. Galileo, like AWS Cloud for IT firms, provides the fundamental infrastructure for Fintech companies. Upcoming finance firms will build financial infrastructure using Galileo in order to provide financial goods. In terms of Galileo's development, by Q3 of 2020, Galileo would have powered over 50 million digital accounts worldwide, up from 21 million in 2019. (almost 100 percent growth YoY). Growth is projected to accelerate more in the future. SoFi may cross market to over 50 million people on Galileo's behalf and provide SoFi loans, brokerage, and technology services, among other things. Both firms have ambitions for future expansion in Latin America and Mexico, where Fintech platforms are still in their early phases. The graph below depicts the acceleration in Galileo, particularly during the epidemic.

The synergies between SoFi and Galileo include the vertical integration of Galileo's technology and SoFi's banking operations, as well as the marketing efficiency of cross-buying between both businesses' consumers. SoFi's Moat is increased by its ability to service both B2B and B2C customer bases. This will result in favorable unit economics that will be difficult to surpass. SoFi will create more advanced Galileo-based products and upsell to Galileo's client base.

Finally, SoFi's acquisition of Galileo allows them to have a cost edge over traditional banks. SoFi and Galileo are creating an impenetrable moat that will be difficult to duplicate among Fintech firms.

3. Bank Charter

SoFi has applied for a banking license. This charter will allow SoFi to accept deposits from clients and use those deposits to make loans (like a normal bank). This improves the value proposition for SoFi members while lowering expenses in comparison to the present approach of funding loan offerings in a non-bank. This would allow SoFi to undertake conventional banking activities without relying on traditional brick-and-mortar infrastructure, resulting in a lower cost basis from which SoFi could make loans to its clients. The charter benefits include a reduced cost of capital and a higher Net-Interest margin on deposits and loans held for a longer period of time.

Golden Pacific Bancorp, Inc. has agreed to be acquired by SoFi (a small community bank in Sacramento, California). The acquisition of this bank will help to expedite its application and approval process. SoFi now operates as a non-bank lender and is forced to form partnerships with third-party banks that serve as intermediaries. This reduces their EBITDA margins and raises the cost of borrowing money for their members. However, with the acceptance of a bank charter, SoFi would be able to lend at a lower interest rate and profit from product differentiation in comparison to other fintech competitors.

SoFi's EV-to-EBITDA multiples for 2022, 2023, 2024, and 2025 are 59x, 31x, 19x, and 13x, respectively. However, when the upside from a bank charter is included, the multiples are 34x, 21x, 14x, and 10x, respectively, according to SoFi's estimates. Earnings are expected to rise as a result of the charter, which reduces the company's multiples. At the current price, SoFi stock is even more appealing due to its bank charter.

The outlook for fintech stocks looks positive since Millennials seem to prefer them over traditional financial services companies. Amid this space, SoFi is very well placed with a wide array of offerings. A bank charter would certainly create an upside for the stock with even more opportunities to expand.

Fintech stocks have a bright future since Millennials appear to prefer them over traditional financial services businesses. SoFi is well-positioned in this sector, with a diverse set of services. A bank charter would undoubtedly increase the stock's value by providing additional chances for growth.


SoFi is heading to the right direction with strong leadership, right strategic direction and bank charter.

Invest wisely, safely and manage risk over profit. Stay safe everyone

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