SoFi Stock: Assuming the world doesn’t end, SoFi is a good stock

SoFi Technologies (NASDAQ:SOFI) stock is taking the same steps to disrupt finances it did a year ago. But the cheers of the investing crowd have turned to mockery.

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Shares of the online bank, broker, and wholesaler are down 27% since the start of 2022. This is despite a small rebound from the purchase of Technisys, a banking software company, for $1.1 billion in stock. Technisys employs 1,300 people. SoFi expects to generate $500 million to $800 million in revenue from the unit in 2025.

On the surface, the deal looks solid as part of a growth strategy. SoFi had sales of about $870 million last year. Now it’s increasing its stock count by 10% for a company that’s completing its wholesale banking portfolio and should make at least $500 million in business.

With Russia marching through Ukraine, however, no one wants to hear about a growth strategy.

bang on the table

I’ve been banging the table for SoFi for a while. During this time I was wrong. I bought some shares in December at around $15, and they’re well under water from the company’s March 1 opening price of around $11.70.

Even as tech stocks continued to fall in January, I urged readers to jump in. Last month, I suggested that the season of buying SoFi stock began with the Super Bowl being played at the stadium where it has the naming rights.

The stock’s failure to take off from there has nothing to do with CEO Anthony Noto’s plans, it has everything to do with those of Russian dictator Vladimir Putin.

Noto’s strategy is to offer both brokerage and banking, both wholesale and retail. In 2021, SoFi made its money from consumer lending, mostly student loan refinances that were packaged and resold. Behind the scenes, SoFi built a banking and brokerage app that also processed cryptocurrency. Its Galileo unit, meanwhile, built application program interfaces (APIs) that other banks and brokers could use to offer similar services.

Over the horizon

Analysts are therefore urging investors to look beyond the war’s horizon, if possible, into the world beyond.

Bank of America (NYSE:BAK), which initiated coverage in February with a buy rating, has a price target of $17/share on the stock. They expect revenue growth of 40% per year as well as margin improvement as a result of Noto’s moves.

SoFi is not unique. Retail offerings will be similar to those of Karl Schwab (NASDAQ:BLACK) that I’ve been using for years. Schwab is worth $147 billion, SoFi $9 billion. The difference is that SoFi is building its technology platform from the ground up. It has less technology debt from legacy systems.

SoFi also has its wholesale platform and uses Technisys to sell software that banks already use for their internal systems. That’s why one analyst dubbed it “the Amazon.Com (NASDAQ:AMZN) web services by fintech.” It is touted among loyalists as Walmart (NYSE:WMT), home depot (NYSE:HD) and Amazon itself.

The final result

Right now, many investors are scrolling through the sinking like liberals during the Mueller probe. It’s hard to keep your attention on the game, your eye on the ball, when nuclear war is on the table.

But if something like that happens, it doesn’t matter anyway. Assuming the worst will make no difference. Your portfolio will no doubt take some hits today, but if you believe there will be a tomorrow, you should be well-positioned for it.

The SoFi share is part of this positioning. The numbers it reports in a year won’t look the same as before because it’s a bank now. It offers wholesale and retail services to consumers, not oligarchs. When this is all over, this will be a good stock.

At the time of publication, Dana Blankenhorn held long positions in BAC, AMZN and SOFI. The opinions expressed in this article are those of the author and are governed by InvestorPlace.com Posting Policies.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of The Big Bang of Technology: Yesterday, Today and Tomorrow with Moore’s Law, available in the Amazon Kindle Store. Write to him [email protected]tweet him @danablankenhornor subscribe to his substack.

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