SOFI stock is down 44% from their most recent high in December of 2021. I have decided to undergo a SOFI stock price prediction as I have noticed SOFI stock has started to reverse from their downtrend (risen nearly 20% since the start of February). This analysis will provide an in-depth look at the underlying factors of the SOFI stock and provide a SOFI stock price prediction for the long term.
If you are not familiar with $SOFI - SoFi Corp., they are an online platform that provides financial services like loans (personal, student, mortgage etc.), insurance products and investment products (ie. $WKLY - SoFi Weekly Dividend ETF) to their American customer base. SoFi aims to be the most convenient financial service in the industry by offering an extensive range of products and services, that can be accessed at any time, on any platform.
On February 2nd, 2022, SoFi announced their acquisition of Golden Pacific Bank. Golden Pacific is a California based bank with over $150M in assets. This acquisition was strategic and allowed for SoFi to obtain their National Banking Charter (which they previously did not hold). SoFi is also undergoing the process to change the name of these banks to “SoFi Bank, National”.
The CEO of Golden Pacific Bank will join the SoFi Bank National team as the “President”, utilizing his experience in the industry/region, and his relationship with existing customers to make the change easier. Through this acquisition, SoFi plans to offer an “elevated digital mobile banking experience to serve local businesses and individual customers”. This acquisition was key in working towards SoFi's goal of capturing the 500M available bank accounts (discussed later).
Even though their management team has no direct influence on the SOFI stock price, their management team provides SOFI with the insights/decisions that will shape the future of the SOFI stock and company. This sectioned is designed to give you (the reader) insight into the background of the highest (executive) managers/officers at SOFI. The following people are listed as the highest-ranking members of the SoFi Management Team.
Anthony Noto (CEO): Anthony is the CEO of SoFi and serves on its board of directors. Before joining SoFi, he served as COO of Twitter since November 2016, and as its CFO when joining the company in July 2014. Prior to Twitter, Anthony served for almost four years as co-head of global TMT investment banking at Goldman Sachs. Before returning to Goldman, Anthony spent almost three years as CFO of the NFL.
Chris LaPointe (CFO): Chris Lapointe is SoFi's CFO. He joined from Uber Technologies where he was the Global Head of FP&A, Corporate Finance and FinTech. Prior to Uber, Chris was Vice President of TMT Investment Banking at Goldman Sachs.
Chris holds an MBA from the Tuck School of Business at Dartmouth College and a Bachelor of Arts degree in Math and Economics From Dartmouth College.
Micah Heavener (Head of Operations): Micah oversees SoFi's operational staff. He joined SoFi from Citi, where he led Cardmember Services for their U.S. credit card business. Prior to that, Micah held a number of leadership roles within Citi's Global Consumer Business.
Assaf Ronen (Chief Product Officer): Assaf oversees Product, and Design and is responsible for the strategy and direction of SoFi's product offerings. Prior to SoFi, he founded and served as VP of Amazon's Alexa shopping group, creating a new market category for voice assistants. Prior to Amazon, he spent nearly seven years at Microsoft where he served as GM of Skype, and as the GM of identity, access, and security products.
As you can see, SoFi's highest level management officers all have prior experience in top management positions at very competitive companies. I believe that each member of their board has the necessary experience in order to succeed in their roles.
In order to undergo the comparable analysis, we need to get an idea of other public companies that have stocks that rival SOFI stock. These competitors must operate in the same space, operate in similar geographies, be of similar market cap, and have valid financial ratios. Using this criterion, I came up with the following.
By comparing SoFi financial ratios to that of their publicly listed competition (listed above in the “competitors” section) I found the following:
Based off of SoFi's P/S Ratio in comparison to their competitors, $SOFI stock price target based off of P/S is $8.12/share, which would imply a share price decrease of 38%.
SoFi's P/B ratio (compared to their counterparts) indicates that the SOFI stock price target is $24.40/share, which would imply an upside of 86% in order to reach their fair value.
SoFi's EV/Revenue ratio indicates that the SOFI stock price target is $8.14/share, which would translate into a potential downside of 38%.
Due to the large variability between comparable analyses, I decided to take average the 3 comparable results. By doing this the overall SOFI stock price target is $13.55, which implies an upside potential of 3.5%. I think that the value in SoFi is going to come from their news and financial reporting in 2022, so I think that this 3.5% just signifies that it is undervalued, as opposed to being limited to 3.5% growth.
My plan for an investment in the $SOFI stock would go as follows: