For the better part of the past few years, SoFi TechnologieÂs (NASDAQ:SOFI) stock has fluctuated betweeÂn a rather tight range of $5 and $10 per share. However, just before the end of last year, this stock touched the high end of this range, signaling some strong potential momentum. And while SOFI stock has given up some of those gains, trading around $7.50 at the time of writing, there’s reason to believe that last year’s rally could continue into this year.
This dip is one I think investors ought to take a serious look at. As a prominent fintech company, SoFi is best known for its core student loan refinancing business. However, the company has notably transitioneÂd into other key businesses wheÂn it acquired Galileo Financial TechnologieÂs in 2020 for $1.2 billion.
Let’s dive into what SoFi’s moves to diversify its business mean for long-term investors, and why this is a stock I’m still bullish on.
Strong Financial Results
SoFi was a simple student loan platform that has since evolved into a versatile banking ecosystem. The company’s lending revenue growth of 48% in the previous quarter proved significant, which led to a 90% increase in net interest income on a year-over-year basis.Â
Alongside its lending segments, SoFi saw an impressive 67% revenue growth in its non-lending sectors, showcasing a 27% increase in overall revenue. With over 700,000 new members and a whopping 1 million product sign-ups in the previous quarter, investors now expect some optimistic numbers moving forward.
SoFi’s deposit growth is worth highlighting, as is its non-GAAP and net revenue profitability. CEO Noto called attention to a potential shift, which will result in the company gaining prominence among its competition. Amid ever-changing economic conditions, SoFi’s path to sustained profitability is one to watch.
Excellent Valuation
Checking a stock’s value is paramount before investing. In the case of SOFI stock, there’s certainly a strong argument to be made that this is a company trading at a fair valuation. At just 3.9 times sales, investors don’t appear to be pricing in a very high growth rate over the long term. And while some near-term catalysts certainly drove outsized growth in recent quarters, there is room to believe a fully-functioning ecosystem could propel this company’s revenue and earnings much higher over the long term.
Thus, I’m of the view that buying SOFI stock below its SPAC price of $10 per share is a decent deal. This is a stock with plenty of upside potential, particularly for those bullish on the future prospects of the fintech sector.
SOFI Could Be the Bank of the Future
A fintech disruptor, SoFi certainly has the potential to revolutionize traditional banking to be something more innovative and more adaptable to technological advancements. SoFi no longer solely relies on student loans, mortgages, and personal loans as their source of strength, and is on a steady pace to grow more in the years to come. Â
What’s more, SoFi has digital banking features, giving the company a competitive edge. With mobile check deposits, bill payments, and streamlined customer service, the platform provides its users with a smooth transaction every time.
So, if you’re looking to leverage your money into profitable companies that adapt to changes and runs on optimal operational efficiency, SOFI stock appears to be an intriguing investment at current levels.Â
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
