Assuming the World Doesn’t End, SoFi Technologies Is a Good Stock to Own

SoFi Technologies (NASDAQ:SOFI) stock is making the same moves to disrupt finance it was making a year ago. But the cheers of the investing crowd have turned to jeers.

Stock in the online bank, broker and wholesaler are down 27% since 2022 began. This despite a small bounce from the purchase of Technisys, a banking software company, for $1.1 billion in stock. Technisys employs 1,300 people. SoFi said it expects $500 million to $800 million of revenue from the unit in 2025.

On the surface, the deal looks sound as part of a growth strategy. SoFi had revenue of about $870 million last year. Now it’s adding 10% to its share count for a company that completes its wholesale banking portfolio and should do at least $500 million in business.

With Russia marching through Ukraine, however, no one wants to hear about a growth strategy.

Pounding the Table

I have been pounding the table for SoFi for some time. During that time, I have been wrong. I bought some shares in December, at around $15, and they’re well underwater at the company’s March 1 opening price of about $11.70.

Even while tech stocks continued to fall in January, I urged readers to get on board. Last month, I suggested the season to buy SoFi stock began with the Super Bowl, which took place in the stadium where it has naming rights. 

The failure of the stock to launch from there has nothing to do with the schemes of CEO Anthony Noto and everything to do with those of Russian dictator Vladimir Putin.

Noto’s strategy is to offer both brokerage and banking, both wholesale and retail. In 2021, SoFi made its money from consumer loans, mainly student loan re-financings, which were packaged and resold. Behind the scenes SoFi was building a banking and brokerage app that also handled cryptocurrency. Its Galileo unit, meanwhile, built Application Program Interfaces (APIs) that let other banks and brokers offer similar services.

Over the Horizon

Analysts are thus asking investors to look over the horizon of the war, if they can, to the world beyond.

Bank of America (NYSE:BAC), which initiated coverage in February with a buy rating, has a price target of $17/share on the stock. Noto’s moves have them expecting revenue growth of 40%/year, plus margin expansion.

SoFi isn’t unique. Its retail offerings are going to be similar to those of Charles Schwab (NASDAQ:SCHW), which I have used for years. Schwab is worth $147 billion, SoFi $9 billion. The difference is that SoFi is building its technology platform from scratch. It has less technology debt from old systems.

SoFi also has its wholesale platform, and with Technisys is selling software banks already use for their internal systems. That’s why one analyst called it “the Amazon.Com (NASDAQ:AMZN) Web Services of fintech.”  It’s being touted among stalwarts like Walmart (NYSE:WMT), Home Depot (NYSE:HD) and Amazon itself.

The Bottom Line

Right now, many investors are doom scrolling like liberals during the Mueller investigation. It’s hard to keep your attention on the game, your eye on the ball, when nuclear war is on the table.

But if something like that happens, nothing matters anyway. Assuming the worst won’t make any difference. Your portfolio is doubtless taking some hits today, but if you believe there will be a tomorrow, you’ll want to be well positioned for it.

SoFi stock is part of that positioning. The numbers it reports in a year will look nothing like what came before, because it’s now a bank. It’s offering wholesale and retail services to consumers, not oligarchs. When this is all over, this will be a good stock to own.

On the date of publication, Dana Blankenhorn held long positions in BAC, AMZN and SOFI. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com, tweet him at @danablankenhorn, or subscribe to his Substack.