Could SoFi Be a Millionaire-Maker Stock?

Key Points

SoFi has been incredibly successful at growing its business in recent years.

Despite the impressive progress it has already made, SoFi could still have tremendous room to grow.

With the fintech on track to reach profitability, now could be a great time to invest.

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Financial industry disrupter SoFi (SOFI 3.69%) has been a rare bright spot among the hundreds of companies that went public via reverse mergers with special purpose acquisition companies during the 2021 SPAC boom. Not only is the fintech a financially stable business and well on the way to profitability, but it has maintained terrific growth momentum, even during the 2022 economic slowdown and the 2023 banking headwinds.

Although its growth has been fantastic, there's a solid argument to be made that SoFi is just getting started. Here's a quick recap of SoFi's recent numbers, where it stands relative to other banks, and why it could still have plenty of room to grow in the years to come.

Massive growth and improving profitability

SoFi's growth trajectory has been stunning, and that's especially true given that 2023 has featured a tough environment for smaller banks. When a few high-profile regional banks failed during the spring, many depositors started pulling money out of smaller institutions and putting it in big banks.

Yet during that period and the months that followed, SoFi did a great job of retaining its customers, in part by adding new features and products. For example, it set up a program with other banks that allowed it to offer its depositors up to $2 million in FDIC insurance, rather than the standard $250,000. Not only that, it continued to grow its customer base.

In fact, SoFi added about 1.3 million new members in the past two reported quarters alone, and its growth rate even accelerated in the third quarter. The Galileo fintech platform posted its largest quarterly member addition since early 2020. Plus, SoFi ended the third quarter with $15.7 billion in customer deposits -- a figure made even more impressive by the fact that SoFi got its banking license in early 2022 and started from zero at that time.

Not only has its growth been impressive, but profitability is right around the corner. Management has said (and reiterated several times) that the company is expected to achieve GAAP profitability in the fourth quarter of 2023. As the business scales, its cost structure (especially when it comes to customer acquisition) should improve dramatically, and profits should grow quickly.

SoFi is still a relatively small bank

Although SoFi's results have certainly been strong, it's important to put into context just how small it still is. With about $28 billion in assets, SoFi is roughly the size of Simmons Bank or Glacier Bancorp. If you've never heard of either of those institutions... well, that's kind of the point.

For further context, SoFi is roughly 15% of the size of Ally Financial by asset size, and about 5% of the size of regional banking leader Truist. JPMorgan Chase -- the largest U.S. bank by assets -- is about 120 times the size of SoFi.

SoFi is not the first fintech company to offer banking products that are superior to those offered by traditional brick-and-mortar banks. There have been online high-yield savings accounts available for decades, just to name one example. But not one other company has been as successful when it comes to becoming an all-in-one banking replacement, and if its momentum continues to build, SoFi could have a lot of room to grow.