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Description
Here we go. @SoFi Deep Dive
SoFi is an online finance platform that aims to help high earners not well served (HENWS). Their goal is to “help their member achieve financial independence” and realize the customers’ ambitions.
Here we go. @SoFi Deep Dive
SoFi is an online finance platform that aims to help high earners not well served (HENWS). Their goal is to “help their member achieve financial independence” and realize the customers’ ambitions.
Services 1/2Offers 4 services for a B2C
1. Borrowing
- student, home, personal loans, and refinancing
2. Investing
- Includes retirement and crypto
3. Banking
- Cash management, SoFi Credit Card
4. Insurance
Services 2/2B2B Service: SoFi at Work
- A platform for companies to assist their employees to achieve financial goals
- Offers a suite of their services to the company to spread to employees
- Galileo
Galileo- API B2B arm of SoFi purchased for $1.2b
- @RobinhoodApp and @Chime were built using Galileo
Offers:
- Account set up & funding
- Direct deposit
- POS authorization
- Bill pay
Edge 1/31) Fast
- Borrow Cash
- Invest
- Pay Bills
- Access Cash
2) One-Stop-Shop for Finance
- 50% of Americans use 2+ Banks
- 80% cite inadequate One-Stop-Shop
- Sofi looks to incorporate/solve all the reasons for using 2+ banks
Edge 2/3 3) Quality of Content
- Offers tons of education & research
- Investing 101
- Refinance
- Lots of Loan, Mortgage Calculators
4) Quality Selection
- No Cookie Cutter terms
- Personalized member benefits https://www.sofi.com/learn/content/timing-the-stock-market/
Edge 3/35) Optionality
- 5 product launches in 1 year
- Products diversified across the financial industry
- Emerging into the Insurance Industry
- Partnered with $LMND and Root https://www.sofi.com/press/sofi-fills-insurance-offerings-together-lemonade-root/
Risks 1/3 Limited diversification
- Diversified in products, but 83% of net rev = loans
- 4.8m in loans, 4m in debt
Crowded space
- Sofi operates in many sectors so they have many competitors
- $SQ biggest competitor
- Bigger user base, could do everything SoFi does
Risks 2/3 Growth
- Huge projected growth, they might not pull through
Concentration
- 5 whole loan purchasers account for 53% of principal bal.
- If those loan purchasers leaves at any point in the next 5 yrs, their growth projections would be slaughtered
Risk 3/3- Believe the “winner takes most” opportunity remains
- Claim that its Sofi’s time to take that
Thus, advertise themselves w/ companies who won their WTM opportunity:
$AMZN
$NFLX
$FB
They can be a winner in fintech, but comparing @SoFi to $AMZN is worrying
Land and Expand- Clear Land and Expand strategy @ Sofi
- How?
- Building loyalty w/ product 1
- Building products that flow well w/ each other
- It works very well
- 95% YoY growth for multi-product members
Network EffectsWith Land and Expand Strategy, Revenue increases @ high rate
Higher revenue growth causes lower CAC and higher profit take
Lower CAC = more net revenue = Sofi is able to lower the costs of products
ManagementAnthony Noto- CEO
- Owns 1% of SoFi
- Was COO and CFO at Twitter
Chris Lapointe- CFO
- Global Head of FP&A at Uber
Lauren Stafford Webb- CMO
- Was at Intuit
On Glassdoor67% approve of CEO (141 ratings)
3.4 stars
Insider Ownership = 53.7%
Strangely, Board member make up almost all of that
Very odd that management heads don’t own as much
https://www.glassdoor.com/Overview/Working-at-SoFi-EI_IE779979.11,15.htm
FinancialsYoY Member Growth- 75%
- YoY Multi-Product Member Growth- 95%
- $621m Adj Net Rev
- $8m assets, $5m liabilities
Rev By Product
Lending
- $514m Net Rev
- 58% Margin
Banking
- $11m Net Rev
- On path to profitability
Tech Platform (B2B)
- $103m Net Rev
- 62% Margin
Estimate 1/2 '21 Estimate
- $980m Net Rev
- $27m Adj EBIDTA
- Lending $710m Net Rev
- Tech Platform $226m Net Rev
- Banking $44 Net Rev
'22 Estimate
- $1.5b Net Rev
- $254m Adj EBIDTA
- Lending $956m Net Rev
- Tech Platform $347m Net Rev
- Banking $194m Net Rev
Estimates 2/2 '24 Estimates
- $2.8b Net Rev.
- $788m Adj. EBIDTA
- Lending $1.4b Net Rev
- Tech platform $682 Net Rev
- Banking $765 Net Rev
'25 Estimates
- $3.7b Net Rev.
- $1.2b Adj. EBIDTA
- Lending $1.6b Net Rev
- Tech platform $911 Net Rev
- Banking $1.2 Net Rev
ChecklistAs of today, the checklist score is 14 for $IPOE
- This is slightly under investable for me
However, it can get to a score of 19.5
They would need to:
- GM to 80%
- FCF positive + increasing
- Avoid customer concentration
- Beat expectations for 1 year consecutively
Checklist link here https://docs.google.com/spreadsheets/d/1_WA2Mp38AkfewIfohy2Y8jAxzrZul3CUArB-cwKyZz8/edit#gid=0
Plan@SoFi is promising and I love the idea of the biz
However, I own stocks that have the same potential without the risks that SoFi has
I’m really digging SoFi, but until they change some things, I’m staying away
Once they do things mentioned, I would definitely jump in
