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Why Shares of SoFi Are Rising Today

By Bram Berkowitz – Nov 1, 2021 at 1:34PM

Key Points

  • SoFi will report earnings on Nov. 10. Investors are optimistic about what they'll see after a rvial recently turned in strong results.
  • Investors also hope the company will soon obtain a bank charter, which would allow it to greatly streamline its operations.

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Investors appear to be bullish about the earnings report that's due out next week, as well as SoFi's prospects of obtaining a bank charter.

What happened

Shares of the one-stop-shop financial services company SoFi (SOFI -1.38%) were up by more than 10% as of 12:25 p.m. EDT Monday, and several catalysts appeared to be driving the move.

So what

The first thing that appeared to have intrigued investors about SoFi was the earnings report from online personal lender LendingClub (LC -11.31%). That fintech generated superb earnings results for Q3 and its stock is up more than 50% since. SoFi will unveil its Q3 earnings results next week, and investors seem to think that LendingClub's results portend good things for SoFi.

Additionally, SoFi in March announced its plans to acquire Golden Pacific Bancorp and the bank charter that comes with it. That would allow the bank to gather cheap deposits and also originate loans without involving a third-party bank.

LendingClub has really enhanced its business model by acquiring its own bank charter, and investors believe SoFi may be able to do something similar. SoFi also received preliminary approval from regulators for a bank charter before the acquisition, there's reason to believe that official approval could be coming soon.

Blue squiggly line trending upward on graph.

Image source: Getty Images.

Now what

The company's third-quarter report should be interesting, although I'm not sure it's a given that it will resemble LendingClub's report. The pandemic's Delta variant disrupted consumer activity in Q3, so it's a bit harder than it might otherwise be to predict results for the period. 

However, I do think approval of the bank charter would be a big win for SoFi, given how hard it is for fintech companies to obtain them. And overall, I feel good about the company's long-term prospects.

Bram Berkowitz owns shares of LendingClub and has the following options: long January 2023 $45 calls on LendingClub. The Motley Fool owns shares of and recommends SoFi Technologies, Inc. The Motley Fool has a disclosure policy.

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