SoFi Stock Pops On Bank Charter License, Expanded Consumer Lending
Written by Tim Hartwell on January 19, 2022
Shares in SoFi Technologies (SOFI) surged Wednesday after federal regulators approved its application for a bank charter license. Analysts expect upside for SoFi stock from consumer lending and deposit accounts.
The Federal Reserve’s Office of the Comptroller of the Currency on Tuesday approved SoFi’s purchase of Golden Pacific Bancorp. However, SoFi’s bank will not be able to offer any cryptocurrency-related services. San Francisco-based SoFi currently provides home loans, personal loans, in-school loans and credit card services.
“While having a bank charter license helps improve credibility and trust, it first and foremost should help lower SoFi’s cost of capital,” Mizuho Securities’ analyst Dan Dolev said in a note to clients. He added, “We estimate the benefit could potentially be $200 million to $300 million of incremental adjusted EBITDA, mainly due to lower funding costs.”
SoFi stock soared 13.7% to close at 13.71 on the stock market today.
With Wednesday’s gain, SoFi stock is still down about 8% in 2022. In addition, Shares have retreated 36% from a year ago.
SoFi Stock: Bank License To Boost Revenue
Morgan Stanley analyst Betsy Graseck said in her note to clients that the comptroller’s approval requires Sofi to provide the bank with $750 million in capital.
“Once up and running, we estimate that the bank can deliver about $200 million or 10%-plus pickup in revenue via a combination of holding loans longer before being sold as well as lower cost of funds, both expanding SoFi’s net interest income,” Graseck said.
SoFi acquired fintech platform Galileo Technologies in 2020. It provides card issuer processing services for some neobanks, including Chime.
Meanwhile, SoFi stock holds a Relative Strength Rating of 15 out of a best-possible 99.
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