SoFi Technologies, Inc. ( NASDAQ:SOFI ) is Taking Consumer Banking Services to the Next Digital Level

June 28, 2021
  •  Updated
November 28, 2022
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SoFi Technologies, Inc. ( NASDAQ:SOFI ) is a new banking platform with two sides. The aspiring and the current.

The aspiring side is SoFi’s vision to become the go-to place for a multitude of banking services, including: lending, saving, investing etc. The current side is a banking app that focuses on 3 lending dimensions: Student loans, Personal loans, and Home loans. The lending segment accounts for 83% of the total revenue, which stands at US$751 m for the last twelve months ending in Q1 2021.

SoFi acts to expand its other segments as well, and is particularly promoting the investing and in-house ETF sections. The investing section boasts 0% commissions, but fees for different kind of services are present under the surface. The company also seeks to promote their own ETFs and make it easier for investors to find and invest in them - however, these ETFs come with expense ratios (a minimum of 0.19 - excluding waivers) which are higher than industry passive average expense ratios estimated at 0.13 for 2020.

There is a long way to go for SoFi to become a widely adopted, integrated, digital banking platform.

Considering the company’s capacity, SoFi raised approximately US$2.4 b in cash proceeds from the transaction to fuel growth, market expansion and development of new product offerings, as well as accelerate the company's plans to expand geographically and build the first digital one-stop-shop for members to borrow, save, spend, invest and protect their money.

This is their raised capital, and they need to utilize it to develop their technology and promote the application to the wider market.

As many young companies, so too does SoFi put forward the fact that they have people on the team, which are associated with famous enterprises. In their press release, they state:

“As part of the business combination, two new directors, Harvey Schwartz, former President and co-Chief Operating Officer of Goldman Sachs, and Dick Costolo, former Chief Executive Officer of Twitter, join the Board of Directors.”

We cannot’t quantify the potential value of these people on the board, nor does their presence speak about any specific actions or steering that they will provide to the company. Not to be misunderstood, there is potential here, but we have not found a way to translate that potential into value.

Shareholder Ownership Structure

Every investor in SoFi should be aware of the most powerful shareholder groups. Large companies usually have institutions as shareholders, and we commonly see insiders owning shares in smaller companies. We generally like to see some degree of insider ownership.

With a market capitalization of US$15 b, SoFi Technologies is rather large. We'd expect to see institutional investors on the register.

In the chart below, we can see that institutions are noticeable on the share registry. We can zoom in on the different ownership groups, to learn more about SoFi Technologies.

Check out our latest analysis for SoFi Technologies

ownership-breakdown Nasdaq:SOFI Ownership Breakdown, June 2021

What Does The Ownership Structure Tell Us About SoFi Technologies?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. In SoFi’s case, it was included in the NASDAQ Composite Index on the 2nd June 2021.

We would expect most companies to have some institutions on the register, especially if they are growing.

As you can see, institutional investors have some stake in SoFi Technologies. This implies the analysts working for those institutions have yet to be convinced to jump in on SoFi’s business model.

Hedge funds don't have many shares in SoFi Technologies. SoftBank Group Corp. is currently the company's largest shareholder, with 8.1% of shares outstanding. In comparison, the second and third-largest shareholders hold about 6.8% and 6.7% of the stock.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

The insiders have a meaningful stake worth US$1.2b or 7.8%. This shows that the success of management is nicely tied with the success of SoFi, which is a great motivating factor.

With an ownership of 6.7%, private equity firms are also in a position to play a role in shaping corporate strategy.

Finally, the largest shareholder is the general public with a 74% ownership stake. This can mean that the company is popular, or that institutional investors are reframing from buying-in just yet, either because it lacks traction, analyst coverage, or there is something holding them back.


We might get a better perspective as to why shareholders choose or refrain from the stock by looking at the fundamental performance .

In the chart below, we can see that SoFi is currently making US$ 751 m in revenue, and is projected to grow to US$ 3.5b in revenue by the end of 2025. Keep in mind that these are average analyst estimates and are usually revised every quarter.

When looking at the fundamentals, investors should ask themselves, “Does a company deserve the current market valuation?” .

In SoFi’s example, that valuation is currently US$ 15.4b, and we should take a moment to evaluate if the business model, technology and performance justify that price.

Nasdaq:SOFI Earnings and Revenue Growth, June 2021


SoFi is a young technology company that seeks to bring integrated banking closer to the consumer.

We feel it has an admirable vision and an interesting business model. However, sometimes it pays to be patient and stress-test management’s business model before going in.

As Howard Marks puts it, “being early is sometimes indistinguishable from being wrong" .

It is also important to know that institutions are not quite ready to put their money in the game, and the current ownership structure is primarily from the general public - this can be a good or bad thing, depending on your investment philosophy.

We are happy, to see a good portion of ownership from insiders, as that signals a shared risk and reward stake with the company’s future.

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 1 warning sign for SoFi Technologies that you should be aware of.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

Valuation is complex, but we're helping make it simple.

Find out whether SoFi Technologies is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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Simply Wall St analyst Goran Damchevski and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.