SoFi has product offerings positioned across most of the industry.
2/ All-In-One Platform:
Offers a comprehensive suite of products across Fintech with competitive rates:
• Lending: Loans for Home, Autos, Students
• Financial Services
• Credit Card
• Investing: Crypto & Equities
This all-In-one platform is a key advantage amongst peers.
3/Bank Charter:
A follow-up to #2, legitimacy of becoming a full bank increases the product stickiness. The GPG acquisition increases their odds.
+ They can lend at better rates;
+ Get lower cost of capital
+ Better interest margin on loans
#3 could really strengthen the moat.
4/ Low CAC:LTV drives long-term value
Building on #2 & #3; Due to $IPOE product mix, they have the ability to cross-sell products at low unit economics which lowers their CAC for every new client.
The platform's product mix helps drive LTV.
Below are examples & Q1 growth:
5/ Galileo Infrastructure:
All the points above are for B2C, Let's talk B2B
Galileo is one of the leading enterprise banking infrastructure in the world.
It powers 90% of the leading neo-banks & fintech companies in the US & UK.
Below are similar players (More on this later)
5i/.. Spent time understanding Galileo.
This platform provides the infrastructure that powers these emerging Fintech players in a sector called BaaS as its API significantly reduces costs and banking requirements.
They power 70M+ Accounts and growing rapidly at +130% YoY in Q1
6/ Data Network Effects
The inherent value of adding a new user across SoFi and Galileo's platforms in their B2B & B2C areas further increases the data loop.
And as AI & Data Analytics builds momentum in banking, this data moat gets stronger.
This effect can drive point #7.
7/ Brand Recognition:
Strengthened by the stadium deal & Social media WOM.
As many people know, SoFi is really popular among millennials & students.
If millennial wealth is the future, there is a good chance the brand continues grow with them.
See the rapid growth as at Q1:
8/ Financials:
The financials and rapid revenue growth of $IPOE supports the entire thesis.
They've consistently recorded accelerating top-line (14% beat) despite a bump in 2020 and some revenue losses incurred.
8ii/ Financials - Bottom-line:
+ Financial services Revs grew 212%
+ FY 2021 Revenue expected to grow 58% YoY to $980M
+ Valuation @ $15B is reasonable relative to growth
+ EBITDA Margins are low but keeps improving
+ Contribution margins of 27%
+ Profitability keeps improving
9/ Management Team:
I listened to a podcast of @anthonynoto's story. He has one of the most unique CEO stories I know on Wall Street. First, His credentials:
+ CFO @ Twitter
+ CFO @ NFL
+ Co-head TMT @ Goldman + Awarded No. 1 ranked Internet analyst for 4-years
+ Wharton MBA
9ii/ Untold Stories:
+ Raised by a single mom,lived on food stamps and grew up tough
+ Trained at West Point & Ranger Academy
+ US Army Telecommunications officer & Captain
His values: Leadership; Work hard & treat others right
10/ Finally, It's clear Fintech's TAM is rapidly growing by 15% CAGR
$SoFi is positioned across the B2B and B2C sectors to capture a major share of this unpenetrated market and capitalize on legacy banks.
Most people know that Fintech represent the future. See some data below:
a/ PS - Risks:
I'll balance my bull case to say the risk is the competitive landscape especially from $PYPL Venmo, $SQ CashApp and smaller players
The 10 advantages outlined still positions them as an integral player in a large TAM. Also, at $15B MC, there's likely more upside.
b/ To go deeper on most of the integral elements of SoFi and especially Galileo in detail, feel free to read this long-form article where I explore the intricacies: