The Ratings Game: SoFi’s stock is poised to benefit from ‘powerful demographic shift,’ a new bull says

SoFi’s business stands out from the competition in a couple of ways, according to Jeffrey.

He thinks the company’s financial products are “designed to allow members to take control of their financial lives,” while its lending products help with “long-term financial well-being.”

These position SoFi for appeal with younger users and to capitalize on “a powerful demographic shift away from traditional banks which have been slow to innovate digital offerings, financial well-being solutions and fast loan decisioning.”

“We submit this financial-lifecycle customer approach materially contrasts [with the] transactional lending model of legacy banks,” he continued.

Additionally, Jeffrey sees a lending “competitive advantage” for SoFi, which obtained a bank charter in early 2022.

SoFi originally had to rely on capital-markets funding, which prompted the company to build discipline on underwriting and risk management. Jeffrey thinks the company developed “superior data” in the process, and can now apply that to its journey as a bank itself.

With about $10 billion in deposits as of the first quarter, up from about $1 billion a year before, the company has benefited from deposit outflows at traditional banks, he noted.

See also: SoFi CEO Anthony Noto loads up further on stock

Jeffrey also has an upbeat view of acquisitions that SoFi has made in recent years, including the recent purchase of mortgage lender Wyndham Capital Mortgage and an older deal for embedded-finance company Galileo that he questioned at the time as Galileo’s customers were SoFi competitors.

Now, however, he sees SoFi as “a leading provider of vertically integrated embedded finance” thanks to these moves.