Investing in the stock market is a great way to build long-term wealth.
Sofi is a fast-growing fintech company that has rapidly expanded its business and attracted a large number of customer deposits.
The company also provides backend technology to non-banks and sees strong demand for its loans from alternative investors.
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If you want to build long-term wealth, investing in the stock market is a great way to achieve financial freedom. The key is to focus on quality companies and stick to stocks for a long time. Patience is your best friend because your investment will have the opportunity to reconcile over time.
A company that causes waves in the fintech world is SOFI technology(NASDAQ: SOFI). The company is rapidly attracting customers and has successfully expanded student loans to become a comprehensive financial services provider.
Sofi has shown impressive growth over the past year, and the company has good demand for its loans. With multiple ways to expand, you might be wondering: Can Sofi become a millionaire maker in your portfolio?
Sofi, a dynamic player in the fintech field, embarked on a journey to help people refinance their student loans. However, during the pandemic, it must adapt to student loan tolerance and shift its focus more to personal loans. In recent years, Sofi has expanded its products to offer a wide range of products, including banking and savings accounts, investment accounts and other financial planning tools.
A key moment in Sofi's growth story is the acquisition of Golden Pacific Bancorp in 2022. This move provides it with a much-needed banking charter. In this way, Sofi can accept deposits, retain loans and launch a set of banking products that exceed its initial loan products. As a result, Sofi's deposit base has grown rapidly over the past few years.
YCHARTS's SOFI total deposit (quarterly) data
Another advantage of owning a bank charter is that Sofi has the opportunity to provide financial products to non-bank companies. FinTech has invested in technology platforms such as Galileo and Technology, positioning itself to provide basic back-end banking services and can support various financial products at the same time. Sofi's technology field is eye-catching due to its stable, paid-based revenue, which helps Sofi differently in the competitive fintech field.
In order for stocks to become a millionaire manufacturer, several key things must be consistent for investors. The company needs to experience consistent long-term growth. After all, building long-term wealth is not a sprint. It's a marathon and patience is essential as you can grow stocks at the inevitable highs and invest in the lows of growth.
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Not only that, the scale of your initial investment and any subsequent contributions will significantly impact your journey. If you invest $10,000 in Sofi today and don't add anything more, you will need that investment to grow at a CAGR of 20% over the next 25 years.
Sofi is growing very impressively. Last year, it reported total revenue of $2.67 billion, up 26% from the previous year. The rapidly expanding deposit base helped it, growing 39% to $25.9 billion. Its net interest income growth is excellent, with analysts covering the company saying revenue could increase by 23% this year.
Most importantly, Sofi gained recognized accounting principles (GAAP) profitability for the first time throughout last year’s fiscal year. Earnings per share were $0.39 and estimated revenue was $0.39. It released another earnings quarter in the first quarter, with revenue of $771 million per share and revenue of $0.06 per share, up 33% from the same period last year.
YCHARTS' SOFI revenue (TTM) data
Sofi is what a reliable stock is needed for long-term investors, but there are some things to do. First, continue to grow and expand its customer base and allow existing customers to use their products more. An important aspect is that Sofi must not only be maintained, but also cross-crossing with customers to make them interact with all products.
Secondly, its credit must be persisted. A promising sign is that alternative investors have shown strong interest in mining loans. Sofi has expanded its lending platform business and referred pre-qualified borrowers to loan partners. The lending platform enables Sofi to meet borrowers’ needs while moving to capital-intensive, fee-based sources of income as its investor partners retain ownership of these loans.
Last year, FinTech agreed to a $2 billion deal with Fortress Investment Group. It is further built on the agreement and now has a commitment of up to $5 billion from the investment company. The company also reached a loan commitment of up to $5 billion with Blue Owl Capital, with a strong demand for personal loans.
Third, its technology platform also needs to continue to grow. The business offers Sofi the potential for higher margins and is an aspect that can distinguish it from its competitors.
Sofi has the potential to get strong returns, but it should be viewed as part of a larger investment strategy. As a long-term investor, focusing on investing through quality companies in various industries with different strengths, Sofi is part of your diversified approach to building wealth in a diverse way.
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Courtney Carlsen has no position in any of the stocks mentioned. Motley fool has no position in any stock mentioned. Motley Fool has a disclosure policy.
Is Sofi Stock a millionaire manufacturer? Originally published by Motley Fool
