Is SoFi A Buy?

🌟🌟🌟SoFi $SoFi Technologies Inc.(SOFI)$  share price has been on a tear with its share price up 3.9% on Friday trading and 12.7% in the past 5 days.  SoFi has now  risen 61% year todate and in 2023 it has skyrocketed 126%!

SoFi is short for Social Finance.  It was founded in  2011 by 4 Stanford graduates.  SoFi is a member-centric, one stop shop for digital financial services with a mission to help people achieve financial independence. 

SoFi's full suite of financial products and services helps its nearly 9.4 million members borrow, save, spend, invest and protect their money better by giving them fast access to its tools, all in 1 app.

SoFi innovates across 3 business segments.  They are Lending, Financial Services and Technology Platform.  SoFi's products include SoFi Checking and Savings, SoFi Invest, SoFi Credit Card, SoFi Protect and SoFi Insights.  SoFi's Technology Platform offers end to end vertically integrated financial stack.  There is SoFi Bank which is a nationally chartered bank too.

To determine whether SoFi is a Buy, let's check out its Q3 24 earnings report released on October 29. 

For the quarter, SoFi reported record Net Revenue of USD 697 million which is up 30% from the previous year quarter.  Q3 24 Adjusted EBITDA is up 90% to USD 186.2 million from the previous year quarter of USD 98.0 million.

SoFi reported its 4th consecutive quarter of GAAP net income, achieving USD 60.7 million in Q3 24.  Diluted earnings per share was 0.05 cents. 

Net interest income of USD 431.0 million for the quarter, was up 25% year over year.  Net interest margin of 5.57% decreased from 5.99% in the previous year, due to shift towards lower yielding secured loans.

SoFi 's continuous product innovation and brand building yielded several milestone in the quarter which resulted in significant member growth as well as product growth. 

SoFi Money reached record highs in Accounts, Total Deposits and Direct Deposit members. 

SoFi Invest continues to provide Main Street investors access to unique investment products like interval funds, private credit, private real estate and much more. 70% of new sign ups are from existing members. 

Loan Platform Business has evolved into an integrated loan platform experience.  This segment has posted record results, driven by a record USD 1 billion of personal loan volume generated on behalf of 3rd parties in the quarter. 

Home Loans saw its best refinancing quarter since Q2 2022.  Home purchase and refinancing grew 23% sequentially, while home equity loan volume grew 44% from previous year quarter. 

Credit performancr continues to improve with personal loan delinquencies and net charge offs decreasing in the quarter.  90 day personal loan delinquency rate decreased to 57 basis points from 64 basis points in the previous year quarter.  Personal loans annualised charge off rate decreased to 3.52% from 3.84% in the previous year quarter. 

New member additions were over 756,000 in Q3 24 and total members reached almost 9.4 million, up 35% from 7 million at the previous year quarter. 

Product additions were almost 1.1 million in Q3 24 and total products were nearly 13.7 million, up 31% from 10.4 million in the previous year quarter. 

Financial Services segment net revenue grew 102% year over year to a record USD 238.3 million in Q3 24.  Net interest income of USD 154.1 million increased 66% year over year, driven by growth in consumer deposits.  Non interest income grew 235% from previous year quarter to USD 84.2 million.  This represents nearly USD  340 million in annualised revenue. 

For the full year 2024, SoFi now expects to deliver adjusted net revenue of USD 2.535 to USD 2.55 billion . This is USD 85 million higher than prior guidance range of USD 2.43 to USD 2.47 billion.  This implies 22% to 23% annual growth versus 17% to 19% previously guided. Financial Services segment revenue to grow more than 80% year over year.  Tech Platform revenue to grow from low to high teens percentage year over year. 

SoFi's management  expects to deliver adjusted EBITDA of USD 640 to USD 645 million.  This is above prior guidance of USD 605 to USD 615 million.  This represents a 25% adjusted EBITDA margin. 

SoFi  expects full year GAAP net income of USD 204 to USD 206 million.  This is above prior guidance of USD 175 to USD 185 million. GAAP EPS of 0.11 to 0.12 cents, above prior guidance of 0.09 to 0.10 cents. 

SoFi is firing on all cylinders.   It now expects to add at least 2.3 million new members in 2024.  This represents 30% growth from 2023 levels. 

What an amazing performance by SoFi!  I have invested in SoFi just 3 months ago as I believe that it was undervalued and oversold.  SoFi 's excellent performance has justified my belief in this wonderful Fintech company.  

I seek companies that have lots of exponential growth ahead and SoFi certainly fits the criteria.  

SoFi has now reported its 4th consecutive quarter of GAAP net income which shows that its management is doing an excellent job.  A profitable company gives investors confidence to buy more SoFi shares.  That is why even though SoFi's shares are up 61% year todate, I believe that its growth story is not over by any means.  So SoFi is a Buy for me.

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