Some short-sellers might target SoFi Technologies (NASDAQ:SOFI) because there’s been turmoil in the U.S. banking sector this year. However, SoFi Technologies stands apart a relative safe haven and its deposits have actually grown. After we’ve delved into the company’s outstanding results, you’ll surely agree that SOFI stock is ready to take flight in 2023.
By now, you’ve surely seen the headlines about banks that got into trouble after over-leveraging themselves on government bonds or cryptocurrency. Prominent examples would include SVB Financial Group (OTCMKTS:SIVBQ) subsidiary Silicon Valley Bank, Signature Bank (OTCMKTS:SBNY) and First Republic Bank (OTCMKTS:FRCB).
SoFi Technologies shouldn’t be lumped in with those failed banks, however. As SoFi Technologies maintains a strong track record of revenue growth and focuses on ensuring the security of the customers’ deposits, SOFI stock offers a setup for outstanding near-term returns.
Deposit Inflow Boosts the Bull Case for SOFI Stock
SoFi Technologies’ shareholders shouldn’t lose sleep over the recent turmoil in the banking sector. While deposits move out of less reputable banks, some of these funds evidently flowed into SoFi Technologies.
CEO Anthony Noto recently pointed out the “diversity” of SoFi Technologies’ “business not being overly dependent on any one product or service.” Noto emphasized that SoFi has products that can “do well” in a high interest rate environment. Yet, the company also has other products that can perform well when interest rates are low.
Furthermore, SoFi Technologies didn’t take undue risks by over-investing its depositors’ funds in Treasury bonds or cryptocurrency. So now, there’s a bond of trust between SoFi and its customers. To bolster that trust, SoFi Technologies now offers up to $2 million worth of Federal Deposit Insurance Corporation (FDIC) insurance per customer account.
Because the customers trust SoFi Technologies, it shouldn’t be too surprising that the company experienced a sizable inflow of deposits during 2023’s first quarter. As Noto proudly noted, SoFi’s Q1 2023 “[t]otal deposits grew by a record $2.7 billion, up 37% during the quarter to $10 billion at quarter-end.”
SoFi Technologies Demonstrates Top-Line Growth and Aims for Profitability
Already, we’ve discovered some startling statistics about SoFi Technologies. There’s more to the story, however. Believe it or not, SoFi Technologies just had its “eighth consecutive quarter of record adjusted net revenue.” That figure reached $472.158 million in Q1 2023, up 43% year over year.
Moreover, SoFi Technologies is preparing to become profitable by the year’s end. As the company put it, SoFi has a “goal of positive GAAP net income in the fourth quarter of 2023.” Some critics might wonder whether this objective is achievable.
It’s an ambitious goal, but I’d say it’s realistic. Just consider the trajectory of SoFi Technologies’ bottom-line results over time. In the first quarter of 2022, SoFi had a net earnings loss of $110.4 million. For Q1 of 2023, the company narrowed its net loss to $34.4 million. So, achieving breakeven or better this year isn’t out of the question.
Get Ready for SOFI Stock to Soar
It’s interesting to consider that a neo-bank like SoFi Technologies could actually be a safe haven for depositors. Yet, SoFi is proving itself as a secure place to park one’s assets during times of uncertainty.
Additionally, there’s no denying that SoFi Technologies’ top-line growth is impressive. Just maybe, SoFi will manage to achieve a profitable profile later this year. So, now’s a great time to buy SOFI stock as it’s still fairly cheap and has near-term moonshot potential.
On the date of publication, David Moadel 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.
