After going public on June 1, SoFi Technologies (NASDAQ:SOFI) made some big moves in the online fintech industry. The reverse merger deal was well-timed but it did catch the post-merger dip and SOFI stock fell.
SOFI is trading close to $15 since the past week and hasn’t seen much action despite the positive Q2 results. It has seen massive growth in the first half of the year but the stock has not soared very high.
SoFi offers complete digital financial services and stands out because it has all its products in one app. The company is right in time to transform the financial industry and could be a strong player in the long term.
I believe the current low is a great opportunity to add SOFI stock to your portfolio. If the company continues to grow at the same rate, the stock will generate stellar returns for investors in the long term. With that in mind, let’s take a look at the investment case for SOFI stock.
Strong Fundamentals
For an investor, the fundamentals of a company make a lot of difference. SoFi’s revenue increased by 150% in the first quarter and the lending segment increased by 105%. The financial services sector grew 200% and tech business increased 45-fold. The first quarter had set the stage for a strong and stellar year.
It recently reported Q2 results that are equally impressive. It is also the first earnings report filed by the company after going public in June. The company doubled revenue and reported a loss of 48 cents a share.
The revenue increased to $231.3 million from $115 million. It generated net revenue of $166 million from the lending business and $17 million in the financial services sector. As the impact of the pandemic slowed down, SoFi’s lending business saw a rise. It saw a 49% rise in home loans, a whopping 188% rise in personal loans and a 9% rise in student loans.
I believe the growth is going to continue for the rest of the year and the company will have robust financials at the end of 2021.
Massive Year-Over-Year Member Growth
SoFi has seen a year over year member growth of 113% for its eighth consecutive quarter and it is no small feat. The member base hit 2.6 million, which is up from 1.2 million the previous year. It saw a rise in total products to 3.7 million from 1.6 million a year ago. SoFi offers several privileges to members, which ensures that the members stick with the company for financial requirements.
The numbers show the company’s strength in terms of product offerings. A rise in member base is a clear sign that the company is catering to the needs of the users. Further, the cost of acquisition will be significantly low as the company does not have physical branches like traditional banks. Since SoFi offers everything in one place, members will be drawn to the platform.
For the third quarter, SoFi expects an adjusted revenue of $245 million to $255 million and an adjusted EBITDA of $(7) million to $3 million. The metrics are proof that the company is moving in the right direction and making giant leaps in the financial sector.
The Bottom Line on SOFI Stock
Investors should keep in mind that the recent decline in stock could be due to the end of the lock-up period and it says nothing about the strong fundamentals of the company.
SOFI stock is a buy while it is on sale. It has the potential to double and soar in the coming quarters. The company is firing on all cylinders and is taking the right steps to increase its user base and generate higher revenue.
Fintech competition is growing, but SoFi is at the top with a one-stop shop for all financial services for the younger generation.
On the date of publication, Vandita Jadeja 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.
