Investing

10 Reasons to Buy SOFI Technologies Stock Now

Kristin Hitchcock

Published: June 28, 2024 10:21 am

The financial services industry has been around for hundreds of years. Legacy institutions, burdened by bureaucracy and outdated technology, often fail to meet the evolving needs of today’s consumers. Financial institutions are often the last ones to evolve in our economy. 

This leaves the door wide open for new companies like SoFi Technologies (NASDAQ: SOFI). This company is a FinTech leader offering a comprehensive suite of financial products through a tech-driven platform. 

SoFi’s innovative approach and aggressive expansion plans position it to become a major player in the financial landscape. However, this company has challenges, particularly with the hurdle of achieving profitability. After all, every company has to make money! 

You can see SoFi’s exact net income in our SoFi Technologies stock price prediction guide. 

We’ll examine the top ten reasons to invest in this company despite these challenges. Its superior user experience, competitive rates, and aggressive expansion plans could position it for a significant market share in the FinTech space. 

1. Superior User Experience

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SoFi’s core strength lies in its user-centric approach. Unlike traditional banks with outdated interfaces and limited mobile functionality, SoFi prioritizes the digital experience. Their fantastic mobile app serves as a one-stop shop for all their customers’ needs.

SoFi goes beyond the basics, offering features like automated investing with just $1, SoFi Relay for multi-bank account tracking, and member-exclusive rewards programs.

This easy app allows users to take control of their financial well-being with ease. It’s rated highly across all app stores, with an average rating of 4.8 stars.

2. Competitive Rates

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SoFi offers more than a user-friendly platform. It also offers competitive rates that undercut traditional financial institutions. By leveraging a leaner operational structure and bypassing legacy infrastructure, SoFi can pass on cost savings to its members. 

This translates to lower interest rates on almost everything, including student loans, personal loans, and mortgages. For instance, they offer a fixed rate of 8.99% for most of their loan options. 

In many cases, SoFi also offers higher yields in their investment products. SoFi Checking offers a 0.50% APY, significantly higher than the national average checking account interest rate.

For these reasons, cost-conscious consumers seeking to maximize their financial returns often benefit from SoFi’s structure. 

3. Aggressive Expansion

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SoFi isn’t content with simply offering what they are now. Instead, they want to expand their reach with partnerships and acquisitions. They want to become the one-stop shop for all financial needs. 

For instance, recently, they purchased Galileo, a leading banking platform. This acquisition allowed SoFi to power other FinTech companies. 

SoFi also entered a partnership to offer credit cards and is actively exploring new avenues to help their companies. This aggressive expansion strategy allows SoFi to expand its product portfolio while pushing it toward the top of the financial services market. 

No company grows without trying to grow, and SoFi absolutely seems to be trying to grow. 

4. Disruptive Technology Platform

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SoFi’s technological prowess goes beyond a user-friendly app. They also leverage AI to personalize their customers’ financial experiences. This AI-powered platform uses user data to understand their risk tolerance and spending habits. Based on this information, SoFi can make recommendations customized to each user. 

This level of personalization goes far beyond what traditional institutions use. SoFi’s AI can generate thousands of personalized investment portfolio options based on individual needs.

Furthermore, SoFi is also working on identifying potential fraud risks with this technology, making their technology potentially safer. 

5. Stronger Customer Acquisition

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One of SoFi’s driving forces is growing its customer base. The company boasts impressive user acquisition rates. They’re able to attract and retain customers at a high rate. Its current yearly growth rate is 44%.

This strong growth can be attributed to several factors. Firstly, they focus largely on millennials and young professionals, looking to align with their tech-savvy preferences. They offer very competitive rates and many products catering to this generation’s needs. They’re looking to be the alternative to traditional banking institutions. 

Plus, SoFi is also very good at advertising and building brand trust. They’re very active on social media and have several successful targeted campaigns. This combination of targeted marketing and a user-centric approach makes them able to compete with more established companies. 

6. Leadership

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SoFi benefits from Anthony Noto’s leadership. Noto’s vision for the company has led to its competitive growth, with revenue increasing by 34% since he became CEO in 2018. He brings a deep understanding of the financial services industry, coupled with experience as a former tech executive.

Noto’s leadership is further bolstered by a team of experienced executives with a proven track record of innovation. Together, the company is committed to creating a more customer-centric financial approach. This commitment is evident in initiatives like SoFi Relay, a free tool launched under Noto’s leadership that allows users to track all their bank accounts in one place.

Noto was previously employed at Goldman Sachs, where he co-headed global TMT (Technology, Media & Telecommunications) investment banking. This role showcases his expertise in navigating the intersection of finance and technology. 

7. High Growth Potential

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SoFi’s growth is undeniable. The FinTech market is expected to expand rapidly in the next few decades as more and more consumers leave traditional banking institutions. SoFi is poised to be a serious benefactor of this change. 

Thanks to its innovative products and expansion plans, SoFi has put itself in a position to potentially see lots of growth over the next few years. This translates to more profitability and potential revenue (which the company can use for further innovation). 

However, there is risk involved with SoFi (and any other newer company). This company is not yet profitable. It plans on achieving profitability as it grows, but this remains a consistent hurdle.

Plus, its expansion plan relies on its ability to navigate regulatory challenges in the future and compete with established companies. 

That said, this company does have the potential for high growth in the future. That comes with high risk, but for those with a high-risk tolerance, SoFi can be a great investment. 

8. Strategic Stock Ownership

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SoFi fosters a shared purpose between its management team and investors. Many people who invest in SoFi believe in the future of FinTech and its potential growth. Many executives in the company also hold stocks, tying their financial success directly to the company. This makes it even more likely that the executives will prioritize the company’s long-term growth. 

For instance, Noto Anthony owns over 8 million shares and has been purchasing more over the years.

9. Growth Through Non-Interest Income

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Many financial institutions largely profit through interest. However, SoFi has the potential to expand its revenue past traditional interest income. It plans to expand its revenue streams through the growth of fee-based services. 

For instance, this includes things like SoFi Career Coaching, which provides personalized planning services to help users meet their financial goals.

This also includes services like SoFi Invest fractional shares, allowing users to invest in high-priced stocks with smaller amounts, and SoFi Relay’s premium tier, which offers additional financial management features, both generating fee-based revenue.

By diversifying its income sources beyond interest-driven models, SoFi reduces its reliance on market fluctuations and positions itself for more stable and predictable revenue growth. In the future, they may have even more income streams as new opportunities and products present themselves. 

As these fee-based services gain traction, they may contribute further to SoFi’s overall profitability. 

10. Potential Dividends

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While SoFi is currently focused on reinvesting profits for growth, the potential of a future dividend should not be overlooked. This is an extremely long-term vision. If you plan to hold the stock for ten years or more, you may want to consider the potential of a dividend. 

It’s all about SoFi reaching profitability. Once the company becomes profitable, the odds of a dividend are much higher. Of course, dividend payments are never guaranteed. It’s all about future growth and focus on building a sustainable business model.

Currently, SoFi has not mentioned dividends. However, many other FinTech companies do offer dividends, so there is a chance they will, too.

For investors seeking a combination of capital appreciation and potential future income streams, SoFi can be a completely long-term investment opportunity.