I wrote about SoFi Technologies (NASDAQ:SOFI) at the end of July. At the time, I said SOFI stock would hit $20 by the end of 2021. 

So far, I’m losing that battle. SoFi shares lost 9.85% in August, set to open September trading at $14.18 a piece. By comparison, the JPMorgan BetaBuilders U.S. Small Cap Equity ETF (NYSEARCA:BBSC), which has SOFI stock in the top 15 of its portfolio of 909 holdings, was up almost 3% for the month.

My InvestorPlace colleague, Thomas Niel, believes SOFI stock is overpriced and could continue to fall in value due to investor concerns about the company itself or an overall market correction.

Fair enough. SoFi is far from a perfect company. 

He’s also right to suggest the wall of worry intensifies as the market keeps marching higher. In July, Fortune published an article that showed the S&P 500 index has only been this expensive as it is today for 4% of the time out of the past 140 years. 

If that doesn’t make you think, nothing will. So, there’s no question investors should be cautious at this point in the market cycle. 

I still believe SOFI can get to $20 by the end of the year. But, it’s going to need these two catalysts to move higher.

Reason #1 SOFI Stock Moves Higher

To consider what the first catalyst will be to push its share price to $20, one needs to look more closely at its second-quarter 2021 results. While there are plenty of metrics and numbers to highlight, I think the most obvious gap in its business is the lack of non-lending revenue. 

In Q2 2021, it had adjusted net revenue of $237.2 million in total revenue. Lending accounted for 73% of the overall total. However, the segment’s contribution profit was $89.2 million, or 51.8% of its lending revenue. That was 80% higher than Q2 2020. 

I like that.

Its other two segments — financial services and technology — accounted for 7% and 20%, respectively, of its Q2 results. Accordingly, I’ve purposely excluded other revenue ($2.6 million in the quarter) in my calculation of percentages. 

The financial services segment — which includes SoFi Money, SoFi Invest, SoFi Credit Card, and SoFi Relay — show a loss that reached $24.7 million in the quarter, while technology had a contribution profit of $13.0 million. 

SoFi has one more quarter to report in 2021. That will be Q3 2021, reporting in November. 

It’s got to show significant revenue growth in the financial services segment. The segment’s contribution to revenue has got to continue doubling on a sequential basis. In Q2 2021, financial services revenue increased by 162% from Q1 2021. 

Forget about overall profitability for now. It’s all about revenue growth and scale. The sooner it gets to 50% lending, 30% financial services, and 20% technology, the better.

Reason #2 It Reaches $20

I’ll preface this second catalyst by admitting that I’m breaking one of my own cardinal rules. Let me explain. 

SoFi has made two acquisitions in the past two years. The first was Galileo Financial, which it acquired for $1.2 billion in 2020. It’s become the technology segment. As mentioned, it is profitable. Its application processing interfaces (APIs) enable financial services companies to issue credit cards, bank accounts and other financial products more easily. 

The other acquisition was its March purchase of Golden Pacific Bancorp (OTCMKTS:GPBI). This gives it a national bank charter and the ability to make its own loans rather than through third parties.

So, these two acquisitions addressed certain business needs, but SoFi management’s yet to do something transformative to help the company’s financial services segment. An appropriate purchase in this area would accelerate its growth to the 50/30/20 model I discussed in the previous section.

Who might this acquisition be? I’m not about to speculate. However, I don’t think CEO Anthony Neto and his team will have difficulty finding an attractive candidate. 

If I had to handicap the odds of an acquisition happening in 2021, I’d put it at 50/50. The company is more than happy with its core products outside of lending, but it can be tough to say ‘no’ when a possible accelerator comes along. 

Yet, I don’t think Neto is the kind of CEO to make a splashy acquisition. It will be strategic in nature, or it won’t happen. 

But if it does before Dec. 31, I could see a quick 20-30% pop in its share price. 

Long-term, regardless if it hits $20 in 2021, I consider it to be an excellent buy. 

On the date of publication, Will Ashworth 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.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.