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Why This Fintech Stock Is Poised for Massive Growth

By Motley Fool Staff – Jan 4, 2022 at 7:31AM

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From 700,000 members to 3 million members in fewer than three years.

In this clip from Motley Fool Live, recorded on Dec. 9, Motley Fool contributors Matt Frankel and Jason Hall discuss one company that rocketed from a student loan lender to a full-service financial services company.

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Matt Frankel: This is SoFi (SOFI -2.95%). SoFi is a financial technology company. They went public earlier in 2021. This was one of Chamath SPACs. This was IPOE. I have to keep my letters correct. They are a big financial services company. They started out as a private student lender and since expanded to personal loans to now they're adding all kinds of other financial products. In addition to loans, there's SoFi Money account [which] is designed to be a checking account alternative. There's SoFi Invest [which] is supposed to be a brokerage account alternative. It's a Robinhood (HOOD 0.70%) but emphasizing investing, not trading. Here, you can trade from your phone [and] things like that. But they are saying this is an investment app. We're not encouraging you to trade and speculate things like that.

Growth has been absolutely phenomenal. If you could see right here, from the beginning of 2019, they had 700,000 members give or take. Now they're just shy of 3 million [in] less than three years. We'll get the year-over-year growth rates on the bottom. They're almost doubling in size year-over-year. Big, big growth story. Here's one of the keys there is. If you look at the chart on the left, that's the growth of their lending product. That's the slow and steady part of the business. That's their student lending, their personal lending, things like that. If you look at the chart on the right, this is the growth of their other financial services products like the money app, the investment app, their credit card they just launched. The business model essentially can bring customers into their ecosystem and then get them to take more and more financial products that SoFi offers. It's a land and expand model and, right now, if you do the math, they have almost 3 million members and just 3.2 million products. Their average member is only in their ecosystem with a little over one product. Maybe some people have a loan and a credit card. But for the most part, customers have one of their products. That gives them a lot of opportunity to expand. SoFi has rebounded a little bit but you'll see it's been a roller-coaster ride since they went public. They're still 37% off their high. If you look at how they plunged recently, yeah, they rebounded a little bit, but this is still a stock that's a lot cheaper than it was just in November. I like this company. I'm an investor in it. I bought it before and after its SPAC IPO. I know Jason's a shareholder in this. I'm curious if, Jason, are you a customer or just an investor?

Jason Hall: I'm not. I'm just an investor but initially I was pretty reticent, if you remember, this is one that partially because I'm not a big fan of a lot of the SPACS that have come out of that shop. But the thing that convinced me with this one is how effectively they've not just added more users, more customers, but those customers are using more of the different services they offer. I mean, this is a full-service financial services company now. It's very impressive to me.

Jason Hall owns SoFi Technologies, Inc. Matthew Frankel, CFP® owns SoFi Technologies, Inc. The Motley Fool owns and recommends SoFi Technologies, Inc. The Motley Fool has a disclosure policy.

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