SoFi (NASDAQ:SOFI) stock was up more than 20% in morning trading on news that the fintech firm cleared one big hurdle. Now, it is officially a bank holding company.
So what happened? And why does it matter?
San Francisco-based SoFi received approval from both the Office of the Comptroller of the Currency (OCC) and the Federal Reserve. As a result, it can now function as a bank holding company.
Up until this point, SoFi has not technically been a bank. Like many of its fintech peers, the company has relied on partnerships with FDIC-insured banks. Through these partnerships, it has been able to hold customer deposits and issue loans.
Now though, things look ready to change. The fintech has a clear path forward to a national bank charter. With this in mind, here are 10 things investors should know about SoFi stock.
10 Things to Know About SOFI Stock
- Investors likely know that SoFi already offers banking products like loans, cash accounts and debit cards. However, officially becoming a bank will allow it to offer more products.
- As part of this, SoFi operates a super app. This allows customers to complete banking and transactions in one place.
- This milestone comes after a long search process for SoFi. The company has been working toward a bank charter for several years, and had previously applied to the OCC.
- One part of this journey involved SoFi coming public. It hit the Nasdaq last year after merging with a blank-check company run by Chamath Palihapitiya.
- However, its time in the public markets has not been perfectly smooth. SOFI stock was down 23% for the year to date up until this morning.
- So what comes next? To officially get its bank charter, SoFi is acquiring Golden Pacific Bancorp. This deal will allow it to operate SoFi Bank as a bank subsidiary.
- Although SOFI stock has experienced some rough trading, things do appear to be turning around. The company says it expects to post $1 billion in revenue for 2021. That is up sharply from $621 million in 2020.
- Additionally, it reported that its personal loan business grew 167% year over year in the third quarter.
- Additionally, many investors may find its stock attractive here. That is because shares currently trade at a price-sales ratio of approximately 13.
- There also may be huge growth ahead. SoFi has estimated that the market for financial services could be worth $2 trillion annually.
On the date of publication, Joel Baglole 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.