SoFi Technologies (SOFI -4.64%) went public through a Chamath Palihapitiya-backed SPAC earlier this year, and like many other SPAC IPOs, it has taken a bit of a hit as the "SPAC mania" has died down. However, in this Fool Live clip from a recent episode of "The Rank" (recorded on Sept. 20), Fool.com contributors Matt Frankel, CFP, and Jason Hall discuss why they ranked SoFi number one out of eight of their favorite fintech stocks.
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Matt Frankel: A stock I own that I've invested quite a bit more in since it went public is SoFi ticker symbol, SOFI. This is short for Social Finance. This was a Chamath Palihapitiya SPAC, this is IPOE. SoFi started out as a relatively niche lender, we'll call it. They started off as a private student lender. They branched out at the personal loans, mostly focused on loans for much of their history. They are just starting to branch out into financial services products.
I mentioned when we discussed Robinhood that SoFi does the stock trading thing better, in my opinion. They launched the stock trading platform that emphasizes investing. They try to build a community of investors who help each other and learn from each other. Really emphasize long-term holding. They have cryptocurrency trading, but they really tried to educate the investor a lot and that's just one example. I'll give to their products in a second. I'm going to share my screen for just one second to show you why SoFi is my number one. Let's see if I can do that right. Can you see that, Jason?
Jason Hall: Yeah, it's hilarious because I was literally going to hit share screen and show the same thing if you weren't going to do it.
Frankel: Look, these are the SoFi members, 2.56 million members and the really key point to notice is that bottom bar year-over-year growth rate. Their growth is not only strong, but it's accelerating. A lot of these growth companies you're seeing growth start to decelerate a little bit now that the worst of the pandemic is coming out. All these tech companies got a huge boom during the stay at home economy. Especially financial companies they were doing the PPP loans, they were doing your stimulus checks people needed to move their money around and things like that. PayPal's revenue accelerated last year. You're seeing SoFi's revenue continued to accelerate. Going through there.
Another thing to point out with SoFi-Galileo, one of the most bullish things I have in my investment thesis. This is their third-party platform where they provide infrastructure to other companies, 79 million user accounts now on that platform, a lot of people will tell you that Galileo was the main reason to invest in SoFi, not their financial services.
A couple of more slides I wanted to hit. I used to be a math teacher, Jason knows this. If you look at the chart on the right, this is their financial services product, which is their big growth area. The one of the left are lending products, student loans, personal loans, things like that. Financial services products are things like their bank accounts, their investment accounts, things like that. If I were teaching a lesson on exponential growth, that chart on the right is probably what I would use as a real world example. That is growing phenomenally well, 243% year-over-year growth. The number of financial services products their users are taking advantage of, has more than tripled over the past year alone. We get into the list of products in a second.
Not a profitable business yet. You can see on the right, they had adjusted EBITDA in the green the last 12 months, but before that they lose money. We're not going to be consistently profitable for some time. That doesn't really matter with revenues growing like you see on the left. If you're not really familiar what SoFi does, I just wanted to hit this list of products real quick. You see their lending products. This is the core original business of SoFi, the Galileo technology platform that I mentioned and all the financial services products that they are just really starting to build out.
This is where the real growth potential is. The average SoFi member uses 1.5 products, either one or two of their financial products. Maybe someone is a personal loan customer and they also have a SoFi money account. There is tremendous opportunity to get that number up from 1.5 to four, five, six products over the next few years. It's not inconceivable to cross-sell credit cards to your loan customers, for example, the SoFi credit cards, pretty new actually this year. A lot of interesting products in the pipeline. It's come out in the past year. I'm very optimistic about the future of this company and I'll let Jason share his thoughts.
Jason Hall: Yeah. Some of the things that I love about this, I don't want to say it's like the anti-Square. But it is in a certain way, because I think some of the things that Square's doing or creating a little more concentration and potentially concentrated risk. SoFi started off lending, and is now adding more financial services that almost de-risk the business. You think about stickiness. Adding more financial services to its base of young users as their financial needs grow.
It's the perfect combination to me if like risk and opportunity. Maybe it's losing money on a GAAP basis. This is the last point. Operating cash flow generated $82 million in operating cash flow last quarter, $56 million in free cash flow. Losing on a GAAP basis, but it's positive cash flows and that means the business is sustainable as it exists today. It may still tap secondary markets and may tap capital markets to fund growth initiatives, but it doesn't have to to fund its business and that's powerful.
Matt Frankel: Good point there, and it's also worth mentioning SoFi, it's down about 50% from its 52 week high.