The stock market was having a strong day on Tuesday, with all three major indices in positive territory and the Nasdaq having a particularly great day, the tech-heavy index higher by more than 3.5% at 10:30 a.m. EST.
However, Social Capital Hedosophia Holdings V (IPOE), the Chamath Palihapitiya-led SPAC set to take fintech start-up SoFi public, is a big standout, with shares up by more than 12% for the day.
The reason for today's big move is likely a combination of a general broad-based rebound in technology-focused stocks, which have been hammered over the past week or so, and news about an acquisition SoFi is making.
Specifically, SoFi announced that it has agreed to acquire Sacramento-based Golden Pacific Bancorp, a small bank with about $150 million in assets and three branches. But SoFi also plans to put $750 million of its own capital into the bank to prepare it for a national expansion.
SoFi already offers some personal banking services, such as high-yield savings accounts and personal loans, and it received conditional approval for a banking charter a few months ago. Acquiring an existing small bank will allow SoFi to get its national banking infrastructure up and running much quicker than building a bank from scratch.
SoFi is expecting the consumer banking side of its business to grow dramatically in the coming years and is set to receive about $2.4 billion in cash when its pending SPAC merger closes (which should be within the next several weeks). Allocating a large chunk of its money to help capitalize a banking subsidiary could prove to be a great use of its resources, and that's why we're seeing the stock move higher in response.