SOFI's good news continues. Which Fintech is a better pick?
SoFi Technologies Inc.(SOFI)$ shares are trading above $10 again for the first time since late last year.
As it stands, the following are the main reasons that are currently fueling the upward movement in the stock price
A $2 billion agreement with Fortress Investment Group that can be utilized for loan originations, which will boost SoFi's referral revenue and expand its loan platform business
Agreements with partners such as Pagaya extend origination capacity in a capital efficient manner, enabling SoFi to retain customers on its platform for cross-selling purposes
Demand for loans is set to accelerate now that we are entering an interest rate reduction cycle, implying a re-acceleration of revenue growth in 2025 and 2026.
Adjusted EBITDA growth is likely to be higher than revenues and margins further improved due to the addition of AI technology and potentially strong performance on the non-lending side of the business, thus supporting current valuation levels even further.
We believe that the presence of the above three companies is low
$SoFi Technologies Inc.(SOFI)$ The lower the level of interest rates, the easier the balance sheet, the more ability to make more home loans, the moderate rise in student loans, and the ease of entry into letter areas such as mortgages also flatten out, resulting in a more moderate level of growth.Additionally, SOFI's high valuation up front because of the SPAC IPO is difficult to
$Upstart Holdings, Inc.(UPST)$ : probably the best choice, its customers are small and medium-sized banks, which originally benefited from the interest rate cuts, and UPST is equivalent to adding with AI, which is to some extent equivalent to adding leverage to the interest rate cut favor.
$Affirm Holdings, Inc.(AFRM)$ There is the most uncertainty about the potential benefit of the three companies, the company is largely dependent on the strength of consumption, and while rate cuts help, income levels and consumer confidence are more critical.
Beta is large for all three companies, but UPST is also gaining more investor favor based on year-to-date performance.
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