While most industries suffered severely due to the pandemic, the fintech space has thrived. And thanks to the spread of the hyper-contagious variant, rising infection rates in several countries could spur demand for fintech solutions for the foreseeable future. Beyond that, in a post-pandemic world, the adoption of fintech is likely to stick as consumers have found that they prefer the convenience offered by these cashless solutions. According to the ExpressWire report, the fintech market is expected to grow at an 8.6% CAGR between 2021 – 2024.
Today we’re highlighting a fintech company that has followed an exceptional growth trajectory, but this may be just the beginning. Continue reading to find out which company is living up to its name as the ‘fastest growth story in consumer finance.’
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San Francisco-based SoFi Technologies, Inc. (SOFI) operates through its own financial services and technology platform. The company offers student loans, personal loans for debt consolidation, home improvement projects, and home loans. In the wake of the pandemic, it has been expanding its portfolio of offerings across business segments, particularly in the Financial Services segment.
So far, SoFi users seem to like the offering expansion. In Q2, which ended June 30th, the company reported that user growth had increased 113% year-over-year to 2.6 million. What’s more, the total products used increased by over 123% to 3.7 million at quarter-end, compared to 1.6 million at the same point last year. Plus, in their investor presentation, the company noted that multi-product members were growing at almost 100% YOY. This shows that SoFi users are expanding their usage to more than one product, which is a testament to their loyalty and stickiness to the platform.
For its fiscal year 2022, analysts expect SOFI’s revenue to increase 51.8% year-over-year to $1.49 billion. In addition, its EPS is expected to grow 63% in its fiscal year 2022. SoFi also has extensive growth projections and, if investors believe management can achieve them, SoFi seems relatively cheap when looking at forward valuation.
SoFi share price has stacked on 26% over the past month. Considering the stock is still down 25% from its all-time high, it’s easy to see why analysts continue to look favorably on the stock, with more jumping on the bandwagon.
Earlier this week, Morgan Stanley analyst Betsy Graseck initiated coverage of SoFi with an Overweight rating and a $25 price target. The analyst calls SoFi a “powerful revenue growth story” as it ramps up share of the consumer financial services wallet. According to Graseck, SoFi “has a leg up given its roots in the hardest part of consumer finance, lending, along with a robust digital offering,” setting them ahead of the competition.
The consensus expects SoFi to hit $25 in the next 12 months, which indicates a potential 32% upside from its current price. Heavy call volume ahead of the November 10th earnings release is another indicator of positive sentiment around the stock. Analysts are expecting $255 million in revenue for the third quarter, which would represent a 10% increase from the second quarter.
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