WWe recently took a look at SoFi Technologies‘ (NASDAQ: SOFI) latest results, and the numbers are pretty impressive. In this fool live Video clip, recorded on November 15, Fool.com contributor Matt Frankel and Focus on industry Host Jason Moser takes a closer look at the numbers and what investors should watch out for going forward.
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Jason Moser: We will start with SoFi. It’s been a pretty good year for SoFi. So far the stock is up, I think 12%, 13%, or something like that, topping the market. Another relatively new issue for public procurement. But I know this is a business you love. You own shares in it, I believe. Tell us a bit about the quarter. What stood out to you and made it a good choice for SoFi?
Matt Frankel: Which is fun as you go through the profit season, the longer it lasts, the more businesses grow. You start with the big banks that you go into, the regional banks and you move into fintech and you get to the very new fintechs.
Moser: Like the grand finale of a firework display. You’re still waiting for that big bang.
Frankel: They save the most exciting for last. This is what we have seen here. SoFi the numbers are fantastic. The stock reacted appropriately; 2.9 million members is almost double what it was a year ago, a 96% year-over-year growth. It added 377,000 members in the third quarter alone.
If you remember what we said the last time we were on the show and talked about SoFi, the key is to be able to cross sell products because the average SoFi member is around 1, 5 produced with the company. Like a personal loan and some might have a credit card or something like that. Revenue increased 108% year over year. The products are growing faster than the membership base which indicates that they are doing a very good job of cross-selling products.
They have announced a very interesting treat, most of their growth is fueled by a few of their products. They said that between SoFi Money, which is their replacement bank account, SoFi Invest, which is their brokerage business, and their new credit card, which is brand new and the smallest of those three products that I just looked at. to mention, generated 79% of their new members. basis between these three products and 73% of their cross-selling came from these three products. Financial services products, including these three, grew 179% year-over-year. The main lending business is doing well, they achieved $ 3.4 billion lending volume between home loans, personal loans and student loans, who remember they started as a refinancing company student loans. Financial services are the big story here.
Moser: It is fascinating to think of how this business has evolved in what appears to be a very short period of time. It’s real finance, a holistic solution, it looks like it’s really becoming. We talk a lot about the environment for the banks. When interest rates start to go up and we feel like we’re clearly headed in that direction. The pace remains to be determined. But anyway, we’re talking about how banks should generally benefit from these rising rates and be able to generate a bit more on that line of net interest income. Do you feel like it’s coming from those same types of tailwinds or is it really products for this company?
Frankel: Well, they do. Today, their lending activities still represent a large part of it. I said $ 3.4 billion in loan volume. SoFi personal loans are typically in the 6-10% interest rate range. Most of these are higher interest rate loans. This is where most of their lending activity is located. They generally benefit from rising interest rates. Not like a one-on-one relationship, like a lot of bank loans. But it is certainly a big driver of growth if interest rates rise.
But right now the big story is product growth. If you increase your bank account customers and investor customers by 180% year over year, a slight increase in interest rates is kind of a footnote at this point. But their priority right now is to grow the business. Then finally sit back and enjoy the interest income and fee income they generate. But at the moment they’re all in outgrowth mode, so interest rates are more of a secondary concern.
Jason Moser has no position in the stocks mentioned. Matthew Frankel, CFP® owns shares of SoFi Technologies, Inc. The Motley Fool owns and recommends shares of SoFi Technologies, Inc. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.