SoFi Technologies (NASDAQ:SOFI) is hardly under-the-radar. Plenty of Americans are aware of the company, and retail investors are well aware of SOFI stock.
SoFi may be known to some consumers and investors as primarily a student loan refinancing company. This is a big reason shares are highly sensitive to news related to the “student loan saga.”
Many are also aware of SoFi’s forays into other digital-first financial services. That’s why SoFi is considered a future rival to established fintech companies like Block (NYSE:SQ) and PayPal (NASDAQ:PYPL).
The market is even well-aware about SoFi’s move into retail banking, but still is underestimating its potential in this market. This may be changing.
Thanks to recent efforts from CEO Anthony Noto, the full extent of SoFi’s potential in this area may be fast becoming more widely-known, as I’ll explain below.
SOFI Stock and Its Full Growth Potential
Sentiment for SoFi Technologies shares have improved massively year-to-date. Since January, the stock has more than doubled in price. In fact, with this massive run-up, some may be skeptical that more runway remains.
Why? At current prices, it may appear that future growth, and a swing to profitability, are already accounted for in the SOFI stock price.
According to sell-side forecasts, SoFi’s earnings per share will swing from negative 20 cents per share this year, to 25 cents per share by 2025.
Compare that to SOFI’s current stock price (around $9 per share), and I’ll admit it’s hard not to argue that its valuation has become steep.
However, don’t assume that growth screeches to a halt two years from now. This rising star in the world of finance could keep growing at a rapid pace between now and the start of the next decade and beyond.
SoFi isn’t merely trying to become the next Block or PayPal. Rather, this “neobank” is aiming to become a “big bank,” by grabbing significant market share from the old school institutions that (for now) dominate the retail banking space.
The Story Is Getting Out
As discussed in my last SOFI stock article, this institution could blossom into a major bank by providing customers a higher level of convenience and service and more competitive interest rates.
SoFi has only held a national banking charter since 2022, yet already has won the business of around 2.7 million customers.
Even if subsequent annualized customer growth decelerates somewhat from current levels (47%), this up-and-coming bank may be only a few years away from having a customer base numbering in the tens of millions.
Again, this aspect of the SoFi story has until now not been as widely publicized, but Anthony Noto is getting the story out.
Via a presentation at an investment banking conference, as well as through an interview with CNBC’s Jim Cramer, a greater number of investors on Wall Street and Main Street now know how well the company is “crushing it” against the big banks.
That’s not to say a sentiment shift resulting from this will drive another doubling in price for shares in the coming year. It may, however, help keep the stock on its current trajectory.
The Verdict
Sure, the SOFI skeptics out there may say Anthony Noto is doing what any CEO would do: paint the rosiest picture possible about his company.
However, Noto has made reasonable forward-looking statements. To make his bullish argument, he has relied on facts, not hype. The bank’s track record in recent quarters also helps to give credence to these statements.
Again, increased awareness of the “full growth story” may not drive the next mega-rally for shares. Still, it could help keep the stock moving gradually higher in the near-term. Shares could add to their year-to-date gains.
On a longer time frame, an increasingly likely swing to profitability, plus a continued rise in confidence that its strategy will help sustain an above-average level of growth. This suggests the potential for SOFI stock to re-hit loftier price levels.
SOFI stock earns a B rating in Portfolio Grader.
On the date of publication, neither Louis Navellier nor the biedexmarkets.com Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
