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Why Shares of SoFi Are Up This Week

By Bram Berkowitz – Nov 4, 2021 at 4:53PM

Key Points

  • Results from other fintech companies have investors feeling bullish about SoFi's upcoming third-quarter report.
  • SoFi investors are also anxious for the company to obtain a bank charter.

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Investors seem to be gearing up for earnings next week and betting that the fintech will obtain a bank charter.

What happened

Shares of SoFi (SOFI -0.67%) traded nearly 16% higher for the week as of market close Thursday. While there was no obvious reason for the move, the fintech company appears to be benefiting from positive news regarding its peers and from investors' anticipation of several upcoming catalysts.

So what

Toward the end of October, one of SoFi's competitors, LendingClub (LC -5.85%), a digital marketplace bank that focuses heavily on the online personal loan space, reported superb earnings results. That stock has gained nearly 50% since the report was delivered. Investors believe this bodes well for SoFi's upcoming third-quarter report, which is scheduled to be released on Nov. 10.

Interestingly, LendingClub obtained a bank charter earlier this year, which has done wonders for its business. Namely, the bank charter allows LendingClub to access cheaper funding, streamline its operations, and save on loan origination costs.

SoFi earlier this year announced its plan to acquire tiny Golden Pacific Bancorp (GPBI) and the bank charter that comes with it. Investors are hopeful that SoFi will soon obtain the necessary regulatory approvals to close the deal.

Red squiggly line with arrow moving upward.

Image source: Getty Images.

Now what

I think that in the wake of LendingClub's earnings report, investors are essentially buying the rumor ahead of SoFi's Q3 release. While I am not certain that SoFi will turn in blockbuster results for the quarter due to the disruption in consumer behavior caused by the COVID-19 Delta variant surge, I do think this fintech is positioned for long-term success. I also believe that acquiring a bank charter could be a game-changer for the company. 

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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