It’s Not Too Late to Start Buying SoFi Technologies

I have been pounding the table for SoFi Technologies (NASDAQ:SOFI) stock practically since its IPO.

the Social Finance (SoFi stock) logo is displayed on a smartphone.
Source: rafapress /

It has the earmarks of a financial giant in the making, I wrote in August. There’s a future worth speculating on, I wrote in September.

I even put some money where my mouth was, buying some shares for my retirement account. They’re up almost 40%.

I’m not the only one who likes SoFi. TV analyst Jim Cramer now has some shares in his charitable trust.  What makes it attractive is the idea of a wide range of offerings, including loans, insurance, and cash management, all available in one mobile app. Once the company has a bank charter, it will be ready to roll.

Patience is Key

Until all the pieces of SoFi are in place, however, it’s going to keep losing money. A loss of 11 cents per share is expected Nov. 10. Analysts are speculating it might be 17 cents. If the numbers are soft traders could send shares down from its current price, just under $23. At the current price the market cap is $18 billion, over 20x expected revenue. If the company falls well short of the expected revenue number, $250 million, it could get ugly.

As far as I’m concerned, the uglier the better. Analysts at Tipranks are pounding the table for SoFi, despite a one-year price target just 11% ahead of its current price. The stock ran up to nearly $24 soon after going public through Social Capital Hedosophia V. It dropped to as low as $14 in August, as the bloom came off the SPAC rose.

By any conventional measure, SOFI stock is now wildly expensive, which is why a bad earnings report could hit it hard. But that’s when you should pounce.

The API Business

The secret sauce to the company remains Galileo.

Galileo produces application program interfaces (APIs) that perform banking functions. This may be the hottest ticket in online software. Just as Twilio (NASDAQ:TWLO) stock has gotten hot with APIs to turn corporate networks into phone systems, the Galileo APIs could do the same in banking. They’re a short cut that make the API company a gatekeeper to the rest of the industry.

There are other catalysts. The investment side of SoFi is bringing out its own exchange-traded funds, including a Gig Economy ETF (NYSEARCA:GIGE). The ETF business is analogous to the API business in that you’re wholesaling without much risk. ETFs have brought Blackrock (NYSE:BLK) a market cap of $145 billion. They have made Cathie Wood of ARK Funds like ARK Innovation (NYSEARCA:ARKK) a celebrity.

If you want crypto, SoFi will also sell you crypto. This makes it a competitor to Coinbase (NASDAQ:COIN), only with a more stable financial platform since you can also buy Coca-Cola (NYSE:KO) stock for a SoFi account.

The Bottom Line on SOFI Stock

Combine insurance, investment, crypto, banking, and wholesaling together. Put it all in an app you can hold in your hand. Then put it under Anthony Noto, a former National Football League executive who got the company a naming rights deal on the new Los Angeles stadium. It adds up to a long-term buy, as Will Ashworth writes.

In the short run, however, SoFi remains primarily a lender. It got its start with student loans, and has expanded the line, but for now it makes money by making and packaging loans. That’s not a sexy business. It’s not a huge business. It’s a business that may disappoint speculators who want big gains now. It may send them running away from SOFI stock.

I certainly hope so. I might like to pick up some more.

On the date of publication, Dana Blankenhorn held a long position in SOFI and BLK. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. Just in time for the holidays he has a collection of COVID-19 stories at the Amazon Kindle store. Write him at or tweet him at @danablankenhorn. He writes a Substack newsletter, Facing the Future, which covers technology, markets, and politics.

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