Some safety-seeking investors prefer to hold big bank stocks. As an alternative, I invite them to consider SoFi Technologies (NASDAQ:SOFI) stock. SoFi Technologies should be fine and can even thrive if U.S. economic conditions get rocky later this year.
I should remind everyone that SoFi Technologies is a legitimate financial firm with a national bank license. Furthermore, CNBC reportedly selected SoFi Technologies for inclusion in its list of the World’s Top Fintech Companies for 2023.
Still, the doubters might wonder whether SOFI stock will be safe this year. I encourage them to stay calm and focus on the facts instead of their fears.
SoFi Technologies Survived the Storm
It’s funny how today’s financial traders seem to have short-term memories. Earlier this year, they were wringing their hands about the failures of regional banks like Silicon Valley Bank and First Republic Bank (OTCMKTS:FRCB).
Instead of panicking, SoFi Technologies CEO Anthony Noto remained calm and actually bought a large chunk of SOFI stock shares. That turned out to be a brilliant and profitable move on Noto’s part.
Speaking of brilliant moves, SoFi Technologies also offered access to up to $2 million in Federal Deposit Insurance Corporation insurance (rather than the standard $250,000) for qualifying checking and savings accounts. So again, we’re talking about a legitimate bank here, not a fly-by-night operation.
In March and April, the financial media posted pictures of long lines at bank ATMs and stokes the fires of fear. Yet, SoFi Technologies survived and thrived, and is as strong as ever now.
SOFI Stock and the Federal Reserve
In case SoFi Technologies didn’t already have enough hurdles to overcome in 2023, there was also the series of interest-rate hikes (with one pause/skip along the way) enacted by the U.S. Federal Reserve. But again, SoFi Technologies continues to grow in meaningful ways.
During the second quarter of this year, SoFi Technologies grew its GAAP net revenue 37% year over year. SoFi Technologies increased its quarter-end total member count by 44%.
Not only that, but SoFi Technologies’ deposits expanded 26% on a year-over-year basis in Q2. Thus, the fears of bank runs were overblown – or at least, we can say that there wasn’t a mass deposit exodus from SoFi Technologies.
Sure, the fear-mongers can point to Federal Reserve Chairman Jerome Powell. He recently warned that the Federal Reserve is “prepared to raise rates further.” However, this means that SoFi Technologies can offer attractively high savings account interest rates.
Plus, in a high-rate environment, SoFi Technologies can charge higher interest rates on its loans. SOFI stock investors shouldn’t lose sleep at night, fearing that SoFi Technologies would be in deep trouble due to rate hikes.
SOFI Stock: A Perfect All-Weather Investment
SoFi Technologies is a legitimate bank that weathered the storm of the regional bank collapse earlier this year.
As the Federal Reserve warns of potentially higher interest rates, SoFi Technologies can navigate this challenging environment and even come out stronger than before.
At the end of the day, there’s no need to worry about SoFi Technologies. The company has faced obstacles before and proved its staying power.
As for SOFI stock, I highly recommend it for future growth as well as durability amid uncertain economic conditions.
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.
