Welcome back to regarded takes with pretty pictures. Last time we looked at a banner with He-Man which was enough to get some regards in. Now we have a lovely SoFi stadium backdrop and some little glowy icons. Oooh ahhh. Onto the DD!
But first, what I did here with my position in the screenshot...
**REGARDED RANT**
After Mattel started recovering, I couldn't have that, so I needed to find a ticker that had real potential to show just how regarded I am \*cue My Way by Sinatra\*... SoFi fit that bill perfectly. I bought calls prior to earnings in preparation for what is almost always a dumpster fire.
Many of my gains in the past few years have come from regarded SoFi plays. I'll buy when it dips, sell when it pops. And I like to fool myself every earnings that maybe... just maybe... this time will be different. But no, SoFi dumped like usual, I bought a bunch more calls to average down, and now it's exciting traders who think they're about to board a one-way trip to Bugatti land while the last group sighs and waits for \~$25-30 again.
**THE DD**
Bless his heart, CEO Noto keeps buying up SoFi stock. Generally that's bullish, but the market hasn't really cared. It keeps dumping. This is my favorite kind of company (regarded, remember?). The growth looks good, the financials looks good, the dilution is minimal (yes, there was an offering, but read the details), but the stock does so many head fakes that, if online discourse is any indicator, the average retail investor is convinced that the company is truly trash. Then the institutional investors let it run. That's the dream here at least.
And while SoFi doesn't sling never-frozen beef nor He-Man figurines, it does have a lot of compelling offerings. You see, I'm something of a nerd in this area, working in fintech and all. I don't have any intimate knowledge about SoFi, but I do know the industry, and wow. Not good 'wow.' More like parents when you share how many upvotes you got on wsb when you lost 69% on the last all-in (rookie numbers).
So I'll focus on that area, since everyone else loves to talk about the consumer side.
You see, the fintech industry is quite regarded itself. A lot of legacy players with a lot of unintuitive tech, poor support, slow adoption to what should be standard, antiquated thinking, short-term planning, layoffs... it's not something you say you wanna get into when you grow up.
That's a large part of why I'm bullish on SoFi. They have a decent app, seeing good cross-buy across services, they keep up on industry trends, and they appear to be forward thinking. Compared to many fintechs and FIs, they look a lot leaner and more innovative. They also have some solid clients in their technology segment, despite it not being their main business.
The technology segment is especially interesting. It can take a while to mature, but a business like that can drive really nice revenues. You can see attrition too, like with Chime, if a client decides to go somewhere else or build their own tech stack, but there's a lot of clients to go around. SoFi has, for instance, a cloud native next-gen banking core (it's basically the heart of a bank / FI, you can open accounts, manage deposits, etc. core banking functions) and an online banking solution (again, a lot of antiquated stuff here, have you seen many bank's websites and apps? Yikes) via their Galileo and Technisys acquisitions several years ago.
I've liked SoFi's strategy on the consumer side too. They've tended to pursue a more affluent segment, people who have basically already done well in their careers and have steady income but may also have room to grow. I tend to prefer that over an Affirm, Klarna, etc. in what I see as a higher credit risk environment.
I think SoFi will continue to differentiate, grow their consumer and B2B business, and command a premium valuation like fintech peers. I'm looking to offload the bulk of these calls assuming shares come closer to 20s-30s again this year and then maintain an equity position. If it dips again after I sell those calls, I'll probably opt for calls again. Rinse and repeat until the cycle ideally stops and it marches onward.
tl;dr fintechs and banks tend to be behind the times, SoFi is looking toward the future
