It was supposed to be an auspicious debut when online finance company SoFi Technologies (NASDAQ:SOFI) went public on June 1. After the company merged with special purpose acquisition company (SPAC) Social Capital Hedosophia Corp. V, SOFI stock was publicly available for trading – but the hype phase was short-lived.
Prior to that, people were able to trade the company indirectly through IPOE stock, which doesn’t exist today.
Yet, the roller-coaster ride didn’t start until Jan. 7, when Social Capital Hedosophia Corp. V announced its intention to merge with SoFi. The stock has had its fair share of ups and downs – and it just reached an interesting price point.
Folks who bought at the wrong time are sitting on a loss now, but that could change soon. Assuredly, this story isn’t over yet – and traditional banking as we know it could be under siege.
A Closer Look at SOFI Stock
January of 2021 was an interesting month, to say the least. SPAC mania was in effect, but subsiding. Also, like it or not, the meme-stock craze was getting under way.
Amid that complex and frenetic backdrop, the markets braced for the transition from IPOE stock to SOFI stock.
And with all of that craziness going on, the stock price rocketed up to a 52-week high of $28.26 on Feb. 1. However, the disappointment phase soon kicked in.
There was an expectation that the merger deal would close by the end of the first quarter of 2021. That didn’t transpire within the intended time frame, though, and some investors apparently jumped ship.
Thus, IPOE/SOFI stock tumbled to the $14.50 area in mid-May. Then it recovered to $24 in June, followed by a slide to $15.50 in the middle of July.
Are you getting seasick yet? The thing is, patient investors could scoop up some shares at the $15-ish level. There seems to be some support there, so that’s probably as good a buy price as any.
Watch Out, Big Banks
The millennial generation is very large and controls vast amounts of money today. Yet, sometimes I get the feeling that old, big banks aren’t bothering to court this demographic.
Sure, traditional banking institutions usually have apps, but that’s not enough nowadays. They don’t truly provide a digital-first ecosystem that would appeal to millennials, not to mention the younger Generation Z.
The solution to this problem could be SoFi, which is short for Social Finance.
When we look beyond the post-SPAC disappointment, we can see a company with a bold vision that’s seriously threatening old-school banks.
SoFi CEO Anthony Noto reported that “about 70% of SoFi Invest member respondents indicated that they regularly (at least weekly) discuss their investments with family members, peers, or colleagues.”
Thus, the SoFi platform specifically allows the users to see what other members are doing with their investment decisions, as well as discover new investment ideas.
It’s an interesting idea with the potential to keep the platform’s users staying longer, and checking in more frequently.
Driven by Data
Moreover, SoFi is taking steps to address the needs of millennials who may be looking to buy their first home.
In particular, SoFi recently announced that it will be adding the Kukun Digital Cost Estimator into its app via Relay, which is SoFi’s personal financial management tool.
This way, prospective home buyers will be able to make more fully data-driven decisions.
Kukun will provide Relay users with:
- Property data, photos, and values
- Automated Valuation Models for users who want to know details about specific home investments
- The Property Tracking feature, which will “allow members to track the value of owned real estate and manage various financial aspects related to the home”
Frankly, I don’t see old banks rushing to add these features to their apps.
Maybe they will be in a couple of years – by which time, SoFi will probably be adding even better features to its app.
The Bottom Line
I suspect that old-school banking institutions are in trouble and they aren’t even aware of it.
That should be perfectly OK with SOFI stock holders.
And if you’re not invested yet, the chance to buy shares at a low price – if I’m right about this – shouldn’t last too much longer.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
