SOFI Stock Price Predictions: Where Will a Bank Charter Take SoFi?

SoFi Technologies (NASDAQ:SOFI) has had a difficult start to the new year. However, shareholders are seeing green this morning, and rightfully so. Shares of the fintech company are trading 13% higher after SoFi reported that it had received two key regulatory approvals. As a refresher, SoFi became a public entity last year after merging with Social Capital Hedosophia V, a special purpose acquisition company (SPAC) run by Chamath Palihapitiya. So, what are these two key approvals?

SoFi billboard seen at night.

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SoFi announced that it had received approval from the Office of the Comptroller of the Currency (OCC) and the Federal Reserve to become a bank holding company. This great news follows a 3-year quest for SoFi to receive a bank charter. The San Francisco-based company received a preliminary approval for a bank charter earlier in October.

However, SoFi isn’t technically a bank yet. The fintech company relies on on partnerships “with FDIC-insured banks to hold customer deposits and issue loans.” To become a bank, SoFi has plans to acquire Golden Pacific Bancorp, a community lender based in California. After the transaction closes, SoFi plans on operating SoFi Bank as a bank subsidiary to Golden Pacific. The transaction was planned last year and is expected to close in February.

SOFI Stock Predictions: Can a Bank Charter Send SoFi Higher?

After the announcement was made, Rosenblatt analyst Sean Horgan raised his price target on SOFI stock to $30. In addition, Horgan increased his 2022 EBITDA estimate to $235 million. The analyst cited the approval news as “the primary driver of SOFI’s expected outperformance over the next 12 months.”

With Rosenblatt’s bullish price target in mind, let’s take a look at how the rest of Wall Street feels about SOFI price predictions.

  • Mizuho has a price target of $17. Analyst Dan Dolev recently lowered his FY22 EBITDA guidance from $257 million to $178 million. The analyst explained that the lower EBITDA value stems from “longer-term expectations from management of achieving an incremental EBITDA margin of 30% by reinvesting about 70 cents of every incremental dollar of revenue back into the business.”
  • Goldman Sachs has a price target of $16. Analyst Mike Ng believes that SoFi’s current market valuation reflects its growth opportunity. In addition, Ng estimates that SoFi will realize a “37% 4-year adjusted revenue CAGR with $1.1 bn of EBITDA by 2025.” However, Ng’s price target was made before SoFi received its bank charter. Ng added that a bank charter will give SoFi the opportunity to reduce funding costs and increase net income interest.

On the date of publication, Eddie Pan did not hold (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 Publishing Guidelines.

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