SoFi Technologies (NASDAQ:SOFI) stock is in the spotlight today following a major bet by Prince Harry, Duke of Sussex and Meghan Markle, Duchess of Sussex . The pair just helped Ethic, a sustainable investing startup, raise $50 million in its Series C funding round. This investment highlights continued funding into fintech companies, even in a time of economic downturn.
The exact valuation of Ethic has not been disclosed, although CEO Doug Scott says it was an “up round.” The fintech startup seeks to create customized portfolios based on a given investor’s interests, such as climate change or women’s rights.
SoFi does not offer customized portfolios, although its platform does offer stock and crypto trading. Still, as a publicly traded company, SoFi holds an advantage over its fintech startup peers, as it is able to acquire investors more readily and easily. The company’s public status also gives it a reputation and name-brand boost.
SOFI Stock in Focus Following Investments Into Fintech
Y Combinator (YC) is a well-known technology accelerator that invests capital into opportunistic startups. The firm invests $500,000 twice a year for a large number of companies. During YC’s summer batch, a fifth of its investments were attributed to improving financial technology.
Payments were the most popular segment within YC’s fintech investments. Neobanks were the second most popular. Investments into neobanks, like SoFi, have soared in recent years. The summer batch included 11 neobank companies, while batches in 2020 and 2021 only included about one or two neobanks. These increased investments highlight the growing demand and acceptance for neobanks.
Meanwhile, shares of SOFI stock have also been buoyed by a recent upgrade from Bank of America analyst Mihir Bhatia. The analyst upgraded his rating to “buy” from “neutral” and raised the price target to $9 from $8. As of June 30, SOFI traded at a book value of just 1 times, which Bhatia believes is an attractive valuation. Shares closed at $5.27 on the day of the upgrade.
Bhatia sees a “meaningful catalyst path” ahead due to the end of the student loan moratorium next year and the company’s multi-year collaboration with NFL star Justin Herbert. SoFi is also somewhat insulated from subprime risk, as it only serves customers with acceptable credit scores. Bhatia concluded that he sees potential upside to fourth-quarter and 2023 growth estimates.
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 InvestorPlace.com Publishing Guidelines.
