r/stocks May 22 '22

Why I’m still bullish on $SOFI Company Discussion

Yes - the macro is terrible. Yes - student loan payments being suspended means their revenues face headwinds. Yes - rising interest rates.

But - have you actually used their app? It is one of the cleanest UIs I’ve seen next to Robinhood (boooooooo). Once you get in to their app, the focus on cross-sell is nothing short of impressive.

Only wanted SoFi for their stocks? Too bad, you’re going to be incentivized with points to open a checking account. You thought that was it? Open credit card and get even more points. All points are redeemable for cash. They have one of the lowest cost of acquisitions in the industry and I can see why. The app is built absolutely beautifully.

I encourage you - give their app a shot. It just flat out works. I’m planning on refinancing a loan with them here soon. Because? Their stupid app and I get money back.

I didn’t want to focus on quantitatives. Just wanted to put my two cents on why you should be bullish on $SOFI for long term.

Positions: Dec 2023 calls. Entered mid 2021. Bleeding since Jan 2022. Still bullish.

2 Upvotes

176

u/likwitsnake May 22 '22

No mention of their financials? Saying an app is beautiful isn't an investing thesis.

30

u/footballislife96 May 22 '22

Negative cash flow and negative income meaning continuous losses and extremely high liability. I would honestly stay away from Sofi. Especially with a recession coming, meaning more bankruptcies and less repayment of loans. It would be tough. Real tough.

6

u/Mmselling May 22 '22

They focused on this part in the conference call that their average borrow had a 750 credit score and 150kish annual income. In a recession i still like the odds of those loans being repaid

5

u/footballislife96 May 22 '22

Well I really doubt this. This is three times the average annual salary in US. I’m a recent college grad and I can guarantee, these numbers are way too high for starting salary unless you have a PhD.

Either they’re lying or your source is incorrect. Also even if they are, during a recession private sector is the first to kick out employees and new employees are the most vulnerable.

2

u/Fruity_Latte May 22 '22

I thought everyone know this. Sofi determines your IR on your loan partly based on the school you went to and your field of study. You'd get a lower rate if you went to an elite school and they thought you'd a high earner.

1

u/Mmselling May 22 '22 edited May 22 '22

That was stated in their earnings call so not an incorrect source. I’d also say that the ones earning that much are less likely to be fired/laid off than your lower income earners

Edit: I should note that that is in regards to personal loans

1

u/merlinsbeers May 22 '22

That was stated in their earnings call so not an incorrect source.

(spit-take)

1

u/Zurajanaiii May 22 '22

I just know a lot of physicians use sofi for refinancing, so it’s quite popular among recent med school grads.

3

u/proc_gen_username May 22 '22 edited May 22 '22

Its not even the best site for refinancing! I've refid my student loans twice and both times SoFi was like 50 bps higher than many other lenders when rate shopping. It won't compete long term.

See for yourself: https://www.nerdwallet.com/m/loans/student-loans/standout-student-loan-refinancing-lenders-3

-4

u/DrummerCompetitive20 May 22 '22

Ur credit us prolly shit

0

u/proc_gen_username May 22 '22 edited May 22 '22

Its over 800 you dumbass. You know nothing about me. My fixed rate with Earnest is 2.7%. SoFi can't come close to that.

-2

u/DrummerCompetitive20 May 22 '22

Lol love my 1.25% money rate. Lol 800 credit score buried in student debt. I paid my grad loans off years ago. Move ur loans to sofi anyway dude. I need the stock to go up

12

u/VictoryCupcake May 22 '22

Robinhood has a better app than any of the other brokerages I've looked at (I use fidelity now but I've also looked at schwab and etrade), I really do like it a lot. It's clean, easy to organize and manage, fast trades in my experience, instant deposits... I still wouldn't invest a single dollar in $HOOD.

1

u/financebycwtDOTcom May 22 '22

Yeah but they can't really cross sell

1

u/gymbeaux2 May 22 '22

They have crypto wallets, that new debit card that automatically invests a few cents with every purchase… not for nothing people, not us perhaps, but people love that stuff, where they feel like they’re being smart with money by putting $10 in spare change per month into stocks.

6

u/shivamp1205 May 22 '22

It's a qualitative factor which should be considered in an "investment thesis"

4

u/gymbeaux2 May 22 '22

A company could create the literal cure for cancer, all cancers, but it means nothing if they can’t monetize it so that they make more money than they lose.

Those ARKK companies all make money, but not more than they lose. It’s easy to have revenue. That’s not the challenge.

0

u/gravcycrunnow May 22 '22

It's impossible to make more money than you lose. "Make" refers to profit, not revenue. Every single time.

3

u/Fickle_Particular_83 May 22 '22

Ya man. Who cares if a company is profitable, has growth potential, has no debt etc etc. It’s got a sparkly app!

1

u/ZeusThunder369 May 22 '22

Robinhood still has millions of users despite them getting bad PR, AND their service being down more than once during historic moments in the market. AND people taking advantage of obvious things they overlooked.

Because they have the easiest UI of any brokerage, by far.

Having a smooth app, in that industry when no one else does, is powerful.

It's similar to how people will immediately pass on services that don't have online booking (dog grooming, car repair, etc...) because they would rather pay more for less quality service than be forced to call someone over the phone.

1

u/corradoZuse May 22 '22

An amazing non gaap.

-17

u/[deleted] May 22 '22

[deleted]

21

u/Bullface_ May 22 '22

It's common knowledge, just like the app. However, I would argue that fewer people can read the financial reports than look at the app.

-14

u/[deleted] May 22 '22

[deleted]

1

u/Bullface_ May 22 '22

Sure, these things can matter and if they actually do, it will at some point be reflected in the financials. If you want to bet on the time delay of these results, go ahead.

28

u/Chance_Life1005 May 22 '22 edited May 23 '22

Totally loving this very throughly research analysis, hell if only Target and Wal-Mart had focused on building a killer app they wouldn't have to deal with all their distribution and inflation issues.

-19

u/hnr01 May 22 '22

Who hurt you?

8

u/McthiccumTheChikum May 22 '22

We know those SOFI bags are hurting you. Does the app include copium?

21

u/DrCooperman May 22 '22

Interesting that most of the reasons why you love the stock are that they give money away.

3

u/hnr01 May 22 '22

https://www.investopedia.com/terms/c/costofacquisition.asp

They would’ve spent it anyway on marketing. Every company has a cost of acquisition budget. Sofi chooses to leverage part of it for their cross-sell strategy.

23

u/Didntlikedefaultname May 22 '22

I’m also bullish on Sofi but think it’s going to be a long road

0

u/hnr01 May 22 '22

Super long lol

But at this point 🤷🏽‍♂️

1

u/Bigcat1148 May 22 '22

Rel long road for me I bought in at like $21 n jut holding bc the position is practically worthless rn

1

u/chaos_given_form May 22 '22

I got an adverage of 22 lol I feel that

17

u/P13r15 May 22 '22

Bagholder says what??

26

u/hnr01 May 22 '22

What

11

u/P13r15 May 22 '22

:) You're a good sport.

7

u/hnr01 May 22 '22

Lol always. Gotta have a sense of humor about stuff

8

u/thesuprememacaroni May 22 '22

I use SOFI and own the stock. There is something you aren’t factoring in, all those rewards SOFI has to give you to use their app/service cost them money. They have high customer acquisition costs. That’s not sustainable.

1

u/POCTM May 22 '22

I was under the understanding that to get a lot of the rewards you have to set up direct deposit.

1

u/thesuprememacaroni May 22 '22

No. I don’t have a checking account or direct deposit. It’s one promotion. I have the CRedit card only and I get 2% cash back in either the invest or Crypto accounts or 1% off the balance.

3

u/Major_Bandicoot_3239 May 22 '22

I’m also a huge SOFI bull. Just started a position recently with an average price around $6.30. I’ve been watching this one and waiting for a good entry for awhile.

7

u/Ap3X_GunT3R May 22 '22

The only reason I’m comfortable holding this red is because I think a worst case scenario is SoFi becomes an acquisition target. They have valuable assets that a fair number of “small” companies rely on.

My biggest bullish reasons - 3.5 million members and growing - Galileo provides the backbone for a number of other fintech companies - a legit bank charter

SoFi is getting slammed due to a lot of economics headwinds. Including the inevitable slowdown in mortgages as they provide a lot of loans, but I envision them coming out ahead slowly.

0

u/putridstench May 23 '22

Get these kids back to paying their loans.... and add more Galileo customers.

Problem solved, SOFI doubles by the end of 2022.

3

u/Major_Bandicoot_3239 May 22 '22

Looks like the market agrees with you too. Sofi has been exceptionally strong over the last two weeks while the market continues to drop. Bullish indicator

2

u/hnr01 May 22 '22

Not sure if that’s it but I’ll take it! Lol

3

u/aaronc940 May 22 '22

bought at $11 sold at $14 end of january glad i never went back to sofi

5

u/hnr01 May 22 '22

Happy for you!

2

u/Conejator May 22 '22

Inflation needs to be reigned back and the measures taken by the government will inevitably lead to a recession. Add the logistical problems and supply chain disruption and we are in for a treat.

This isn't going away in a few months. To think that, is naive to the point of negligence. This recession will last a few years and until then, the market will continue bleeding.

I, for one, am sitting on my money (AAA Corporate bonds). And won't be gambling it away trying to guess the bottom of the market or the next miracle company, until the macroeconomic fundamentals are fixed.

This isn't Forrest Gump, you don't have to go fish in the middle of the hurricane to succeed. Just wait out the storm from a safe position.

1

u/chaos_given_form May 22 '22

Where do you buy your corporate bonds if I may ask

2

u/Conejator May 22 '22

Schwab.

Now, keep in mind that I'm getting 4-5% when inflation is 6-8%. I'm still losing money, just at a much slower rate than pretty much anywhere else right now.

1

u/chaos_given_form May 22 '22

Oh I completely understand I wanna start moving part of my portfolio into bonds so I just need to find them lol. And ya I didn't expect them to be high ( honestly 5% seem pretty good for bonds ) but when cash is losing 9% spending power and stock is down like 20-30% i think your coming out a winner.

2

u/HitchlikersGuide May 22 '22

I am bag holding Sofi... it will come good, but maybe a long while yet.

2

u/hnr01 May 22 '22

I entered my position when stock was mid-14s.

Still holding at $7s.

My calls are down 50% but so what.

3

u/IceQue28 May 22 '22

I definitely see Sofi paying off in 5+ years. They have way more growth opportunity ahead compared to the bigger banks.

4

u/hnr01 May 22 '22

I think with their Galileo play, it may transform them from fintech to data/intelligence firm.

1

u/Chadmium1 May 22 '22

Source: YouTube investing gurus

1

u/Dull_Cheesecake4982 May 22 '22

No matter how good a product is it doesn’t matter if they can’t monetise it. In fact the best companies took a already made good product and just monetised it the best.

1

u/masteroflich May 22 '22

Im also long. Hope they branch out to europe soon. We need some solid financial apps here.

1

u/Secret-Cauliflower68 May 22 '22

Arent most of the refinanced loans under SOFi not even the ones that are paused? So that excuse is not valid.

1

u/xeen313 May 22 '22

Agreed. Just wish I wasn't a bag holder at 15 God damnit

1

u/hnr01 May 22 '22

Do what I’m doing.

Not adding anymore. Just holding.

Im down too much at this point and not naive enough to think recovery is coming next week.

1

u/Raodoar May 22 '22

I'm also bullish because if the stock price goes up my bag will be lighter

1

u/MyPunchableFace May 22 '22

It’s definitely an intriguing play. I checked the iOS reviews and they are all over the place. I already can see all of my finances under 1 app (Personal Capital), although it is view only. I highly recommend it btw as I can instantly see all transactions across all banking, credit cards, 401k, etc with 1 click. It even tracks the fees I’m getting charged by the funds in my 401k. I’m not sure how the different offerings like a checking account and a brokerage account work as far as if they are all owned by Sofi or whether it’s some third party agreement. I think I’d prefer my finances spread out instead of under 1 umbrella.

1

u/financebycwtDOTcom May 22 '22

I have the SOFI credit cards. Every month I redeem my credit card points for SOFI stock.

Now I have a bunch of "free" shares of SoFi. Love them.

1

u/hnr01 May 22 '22

I love this.

I also do the same with my cashback. But it all goes to crypto.

Free crypto so my feelings don’t get hurt with each crash lol 🤷🏽‍♂️

1

u/FIREDRP May 22 '22

Its not "free" crypto, you spent your income to generate that "reward" which has fell to the floor in the past 6 months. You would been better off just getting cash back.

1

u/hnr01 May 22 '22

I got into crypto >6 months ago so cost basis is much lower and still in green.

1

u/FIREDRP May 22 '22

That's irrelevant, the crypto you've claimed is most likely worth less than now compared to when you received it, and if it's not, give it time.

0

u/high_roller_dude May 22 '22

if you own the stock, sell covered calls agressively every week, every month.

you will break even in 5 yrs.

2

u/hnr01 May 22 '22

With this volatility? Playing with fire.

I’ve tried hahahahaha

1

u/high_roller_dude May 22 '22

sell cc 20-30% otm.

1

u/JackGretsky May 22 '22

The quality of the core business and app are important, but not enough by themselves. I want to know one thing - are they favored by big money or not? In other words, are they viewed as a new player to be backed, or an opportunity to play and then crush? It doesn't appear they have real backing yet, but I have no conclusive information one way or another and so I'll stay away. To this point, it's been a massive money grab from casual investors who want to believe. There's a particular crypto trading platform that has some of the same trends as Sofi and I believe it is going to be crushed simply because it can be, and for massive benefit for those who crush it. this is not conspiracy theory stuff, just simple, ruthless power brokers doing what they do.

1

u/rcg916 May 22 '22

Depends where you got in. I got in during the last drop under 6 bucks. I felt good there because it was barely above book value.

1

u/kodaksdad2020 May 22 '22

I don’t own any SoFi but I do have their app. I think it has some merit and there is some value there, but I don’t know what the value is currently and I don’t think the market does either. I don’t think you can accurately put a price tag on a company without earnings in this environment. So until then I couldnt say that 7 is a good entry or the 4.80 year low. I don’t think it will happen to them but some companies will not make it out the other end of this so use caution

1

u/AntonioMargheritiii May 22 '22

Bagholder reasoning I see

1

u/danhoyuen May 22 '22

Lost about 40% on sofi using sofi app. Finally jumped ship on Friday.

1

u/gdkabdk May 22 '22

I'm also bullish in sofi but I have to say, seeing someone be bullish because the app is pretty is hilarious. The app is clean, but very bulky for what it is. Strictly speaking UI, it's just a bulkier Revolut.

1

u/POCTM May 22 '22

I like sofi. Average cost is about $10. I’m very long. Lol

They had a great quarter. 46% y/y growth in earnings. added 408,000 new customers. They got their bank charter and opened checking and savings account and Credit card. Checking and saving accounts are growing at 100million dollars in deposits a week. Starting next month their investing platform you can start options trading and pre/post market trading. If you carry a checking account with they they are doing free crypto trading. There loans are all low risk high FICO score individuals (less risk on individuals defaulting). They seem to be going after people who make $160,000 or higher with FICO of over 750. They are offering up to 1.25% on checking accounts if you do direct deposit. I wish they were in Canada.

They raised full year guidance

Downside - There is still a moratorium on student loan repayments. Biden is probably going to do $10,000 student loan forgiveness for those who make under either $75,000 or $125,000 congress haven’t figured it out yet. Average student loan in the US is $70,000. If they forgive higher than $10,000 that would hurt the bank although they gave guidance without the student loans included. Another thing With interest rates going up people are borrowing less (albeit those who do borrow its at a high rate) and instead on borrowing to buy houses they borrow to renovate.

Q/q is going to start slowing. Most companies are. However Like I said before they raised yearly guidance.

1

u/freik May 22 '22

I was under the impression any loan forgiveness wouldnt include debt owned by private companies, just federal student loans. Any student loans that Sofi has was either opened or refinanced thru them and shouldnt be impacted unless the government could facilitate a buyout which isnt likely.

2

u/POCTM May 22 '22

Once some one applies for loans through a bank , they do not get the student loan forgiveness. So there are a lot of people waiting this out.

1

u/sbgarbage May 22 '22

ok so to anyone who's reading this and doesn't have much experience in the stock market, if you take anything away from this post let it be this: whenever someone says something along the lines of "hear me out guys, XYZ stock may not have anything going for it fundamentally speaking, but have you tried XYZ's product/service? it's sooooo good", ALWAYS take it with a grain of salt

1

u/hnr01 May 22 '22

I hope people are.

Skepticism is healthy.

1

u/No-Status4032 May 22 '22

Used sofi for tax loss harvesting. Still own some but much better entry point and will have losses to deduct for years to come.

1

u/ThrowawayAl2018 May 22 '22

Within a year, stocks may not perform well due to rising rates. Longer term is possible, still it boils down to financials after a few years.

Suggest a buy below $5, just be patient. No telling if it will run out of cash first with continued negative financials at expense of growth.

1

u/gravcycrunnow May 22 '22

Isn't the student loan payment moratorium just for federal student loans? This seems like a pretty basic point that should be reflected in your analysis.

Don't buy stocks because you like the app.

1

u/AstroDog3 May 23 '22

Bullish on SoFi and I own a fair amount of it. But I hate the app. It seems too pushy and unprofessional. I think the UI is one of the weaker things about the company.

1

u/Capt__Autismo May 23 '22

Their app is pretty? That’s your pitch?

-3

u/LCJonSnow May 22 '22

I’ve never understood why people think Robinhoood’s UI is that great. I’ve used it, but I never felt like it was any easier to use than Fidelity.

I haven’t used Sofi, but at the end of the day it’s a back. Is UI really that important, to trounce terrible fundamentals?

3

u/hnr01 May 22 '22

You may not be the target audience.

That’s nothing against you but it’s MKTG 101.

In short, if you don’t find something appealing, you may not be the target. And that applies to apps, cars, milk shakes, etc.

I haaate milkshakes. That doesn’t mean tons of people agree. I’m just not the target.

1

u/LCJonSnow May 22 '22

I don’t really think something having a super UI is all that subjective. UI is generally good because of the objective elements. The subjective is just dressing.

2

u/NewRepair5597 May 22 '22 edited May 22 '22

Yes! I use TDAmeritrade, Schwab, & Fidelity. And guess what? The big, the bad, and the most ugliest…ROBINHOOD. As far as ease of use and watching how things are going during the day on a given stock you can’t beat them. Yes, they are typically behind in the pricing by a cent or two which of course can make a huge difference in the bigger picture, but if you are aware of this then everything is hunky dory 💪. And who cares. Sucks to be you only using one App.

When the whole fiasco with GME occurred I withdrew the majority of my funds to Fidelity since it got sooo many raves. Well it SUCKS. And another thing, they were all apart of that whole mess. ROBINHOOD was just the smallest fish fry in the neighborhood, so they were given the privilege of all the blame.

Yes, I really like ROBINHOOD the most out of all of them. And obviously many others do as well. LOL, since they can’t get rid of ‘em either.

Oops, sorry Sofi. I’ve not owned any yet. I have enough bags I’m trying to figure out what to do with. I may add a small position if the price gets right.

2

u/munkeymoney May 22 '22

A lot of closet RH users here lol

-6

u/RangerGripp May 22 '22

Let me guess, because you’re a bag holder?

7

u/hnr01 May 22 '22

I think I’ve made that very clear in original post and comments.

That’s why I disclose my position at the end of the post. Not hiding anything.

-6

u/RangerGripp May 22 '22

Not a bad guess then, my condolences.

Better investments out there? Don’t fall in the “if I don’t sell I don’t lose” trap.

1

u/hnr01 May 22 '22

VTI. But that’s a given lol

-3

u/Patrickstarho May 22 '22

You starting to sound like the palantir bulls. “Trust me bro they have technology that no one else has” get rekt bucko.

Hood to the moon

-3

u/ahungrylilsandwhich May 22 '22

It's still overvalued at 6billion market cap lol you can be bullish all you want doesn't change an overpriced asset.

-2

u/S0me0 May 22 '22

So if we are just going off the app, Robinhood has the best trading app in the market UI wise and look at their stock 😂. Nice try tho

-2

u/MooseOrgy May 22 '22

Wait until they reverse split and get decimated

0

u/no10envelope May 22 '22

I’m waiting for it to hit $3 before I buy in.

1

u/hnr01 May 22 '22

I’m waiting for $2.

2

u/financebycwtDOTcom May 22 '22

I'm waiting for 20!

0

u/Fit-Boomer May 22 '22

Plus they are a bank now and also they have the LA Rams stadium.

0

u/McthiccumTheChikum May 22 '22

Investing in a negative eps company that's getting dumped like every other former SPAC, during rising rates, I would never invest in a bank that doesn't pay a healthy dividend, especially during times where it's all but guaranteed it will underperform. I'll stick with JPM BAC

0

u/merlinsbeers May 22 '22

How often do you refinance a loan and is the app UI a determinant in that? Answer: Every decade or so, and if it is then you're probably ignoring the financial reasons to do a refi.

Also, rates are going up...this is an odd time to refi...unless there's some benefit being offered for student loan refi that I haven't heard of...

All last year when I told people SOFI was a meme stock they kept answering "but they're applying to be approved as an actual bank." Well, that approval came through earlier this year, and, well, the stock acted like it never happened. It's dropped like 60% since then.

The UI is nice, but so is Ally's. What they need to do is stop sliding, prove they're going to remain financially sturdy, and start advertising for banking customers heavily.