SoFi Invest Technologies is a captivating investment for those investors who suspect that over the next ten years the majority of the legacy financial institutions will be thrown into disorder and overtaken by new digital substitutes known as neobanks. SoFi Invest has been recognized as a neobank that possesses the best chance to take on the legacy financial institutions and gain a noticeable market share.
While the majority of the neobanks have opted to focus on a specific area SoFi Invest has taken a different route by creating a wide range of financial products such as a SoFi that will offer its customers improved services compared to the digital products offered by legacy banks.
According to the experts at SoFi Invest they believe they are going after a Total Addressable Market that is worth 2 trillion dollars and it is attracted, numerous investors. The company shows that it is gaining some traction. The pandemic was the main reason for driving away numerous people from visiting their local bank branches and instead it drove them towards more digital alternatives. SoFi Invest was among the several fintech companies that took advantage of the situation.
Like numerous fintech stocks, SoFi Invest stock decreased in value in the second half of 2021 and some investors think that the stock is being undervalued taking into consideration the company has been taking advantage of its huge chance by presenting quick growth in revenues, members, and accounts.
SoFi Invest also faces huge risks mainly from SoFi’s rapid growth which was fueled by the pandemic is showing signs of slowing down as we begin to recover from the effects of COVID-19. The rise in interest rates has also scared away some investors from SoFi Invest due to uncertainty. SoFi Invest has not been consistently profitable and its stock is considered undervalued by some investors.
Many experts believe that legacy financial institution are currently in the middle of a disturbance from the neobanks and that is the reason why many investors are looking to invest in companies such as PayPal, Coinbase, and SoFi. Another factor that is pushing people to neobanks, as well as other fintech and away from legacy banks, are Gen Z and Millennial generations have become increasingly disappointed with the more traditional financial services.
Research has shown that by the year 2030 80 percent of the traditional banks will no longer be operating or will be rendered irrelevant. Its believed that neobanks and blockchain will most likely make this prediction true.
SoFi Invest has two major drivers for revenue one is its membership growth. SoFi’s membership grew rapidly at the start of the pandemic but it started to slow down once the COVID-19 reached its lowest since the pandemic started. The second factor that drives the growth of SoFi Invest is its product growth. Just like its membership growth, the product growth was quick at the start of the pandemic but has since slowed down. Though lending products such as student loans and personal loans have been the largest source of growth.