This is a step-by-step stock review to answer the question, is SoFi (SOFI) stock a good buy?
This article will teach you how to use the 4Ms of investing. This will be a detailed walkthrough to show you how the 4Ms work and why they are important. If you are interested, you can log into Tykr to use the 4M Confidence Booster (Powered by OpenAI) which will allow you to complete a 4M Analysis in less than 60 seconds.
What are the 4Ms?
- MOS (Margin of Safety) – The MOS is the math part of investing which includes the Summary, Score, and MOS (Margin of Safety).
- Meaning – The meaning is the business model and how scalable the revenue streams are.
- Moat – The moat is how the business compares to other companies in the same Sector and Industry.
- Management – The management is the track record of the CEO.
What 4M score are we going for?
- 80-100 = High confidence – Yay! You should have high confidence buying this stock. It passes all 4M!
- 60-79 = Moderate confidence – Alert! There may be better stocks in the market. Only buy this stock if you truly believe the company will improve!
- 0-59 = Low confidence – Warning! There are better stocks in the market. Due to the low score, you should consider looking at other stocks.
Table of Contents
1. SoFi Company History
When investing in stocks, it’s important to know the company’s history. This helps us understand the various revenue streams, if they acquired other companies, how they grew through difficult times, and how they separated themselves from the competition.
- Founding:
- SoFi, short for Social Finance, was founded in 2011 by Mike Cagney, Dan Macklin, James Finnigan, and Ian Brady.
- Initial Focus:
- Started as a student loan refinancing company, aiming to help graduates manage their student debt more effectively.
- Rapid Expansion:
- SoFi quickly expanded its services beyond student loans to include personal loans, mortgages, investing, and banking.
- Venture Funding:
- The company attracted significant venture capital funding, fueling its growth and innovation.
- Membership Model:
- SoFi introduced a unique membership model, offering various financial products and benefits to its members.
- Technology Integration:
- Leveraging technology, SoFi streamlined the loan application and approval process, offering competitive rates and terms.
- Brand Diversification:
- SoFi diversified its brand by offering services beyond traditional banking, including career counseling and networking events.
- IPO:
- SoFi went public through a merger with a special purpose acquisition company (SPAC) in 2021, raising capital to further expand its offerings.
- Community Engagement:
- SoFi prioritizes community engagement, hosting events and providing educational resources to empower its members.
- Innovation Hub:
- With a focus on innovation, SoFi continues to develop new products and services to meet the evolving financial needs of its members.
- Future Growth:
- SoFi aims to continue its growth trajectory, becoming a comprehensive financial services platform for its members, offering solutions for borrowing, saving, investing, and more.
2. MOS (Margin of Safety)
When investing in a company, the first step is to look at the financials. Fortunately, Tykr does this for us automatically. The higher the score, the stronger the financials and the safer the investment. The higher the MOS, the higher the potential returns you can make.
- Summary: Watch
- Score: 50/100
- MOS: 1%
To see the most up-to-date Summary, Score, and MOS, please log into Tykr.
3. Meaning
When investing in a company, it’s important to know how a company makes money. A mature business model has multiple streams of revenue which allow the company to weather downturns in the economy.
Here is how SoFi (SOFI) makes money:
- Interest on loans like student, personal, mortgages, and refinancing.
- Origination fees on certain loans add to revenue.
- Membership fees for premium services are charged.
- Revenue comes from managing investment portfolios and other services like SoFi Invest.
- Financial products like insurance and banking services bring in revenue.
- Collaborations with partners in various industries result in referral fees.
- Providing technology solutions brings revenue through licensing or service fees.
- User data insights and analytics are monetized through licensing agreements.
- Advisory services such as career coaching generate revenue through fees.
- Expanding product offerings may create new revenue streams, like partnerships or new financial products.
Here are a few of the other companies that SoFi (SOFI) has acquired over the years. This is important because a company will use a “Buy before build” philosophy to go to market faster and add additional streams of revenue. A company with more revenue streams has a more stable business model. Keep in mind, that most companies don’t build new software because it takes too long to go to market and generate revenue.
- Zenbanx
- Clara Lending
- Galileo Financial Technologies
- 8 Securities
- Golden Pacific Bancorp
4. Moat
When investing in a company, it’s important to understand how a company ranks against other companies in the same sector and industry. Based on the Score, here is how SoFi (SOFI) stacks up against other companies.
- PayPal (PYPL) – 56/100
- SoFi (SOFI) – 50/100
- Block (SQ) – 45/100
- Green Dot Corporation (GDOT) – 33/100
- Upstart (UPST) – 28/100
- LendingClub (LC) – 28/100
To see the most up-to-date Summary, Score, and MOS and each stock, please log into Tykr.
5. Management
When investing in a company, it’s important to understand who the CEO is, what they have accomplished in the past, and how they have helped this company grow. Good leaders typically have stronger cultures, less turnover, and better returns in the stock market.
- Strategic Partnerships:
- Anthony Noto played a crucial role in establishing strategic partnerships with key players in the financial industry, such as banks and fintech companies, to expand SoFi’s product offerings and reach.
- Acquisition Strategy:
- He led SoFi’s acquisition strategy, identifying and executing acquisitions like Galileo Financial Technologies, which enhanced SoFi’s technological capabilities and product portfolio.
- IPO Preparation:
- Noto spearheaded SoFi’s preparations for its initial public offering (IPO), overseeing the company’s transition to a publicly traded entity and ensuring readiness for the public markets.
- Brand Expansion:
- Under his leadership, SoFi expanded its brand presence and recognition through targeted marketing initiatives, partnerships, and sponsorships, increasing brand awareness and customer acquisition.
- Financial Performance:
- Noto contributed to SoFi’s strong financial performance, driving revenue growth and profitability through strategic initiatives and operational efficiency improvements.
- Product Innovation:
- He supported product innovation efforts at SoFi, guiding the development and launch of new financial products and services that catered to the evolving needs of SoFi’s members.
- Customer Experience:
- Noto prioritized enhancing the customer experience at SoFi, implementing initiatives to improve customer satisfaction, engagement, and retention.
- Talent Acquisition and Development:
- He focused on attracting top talent to SoFi and fostering a culture of innovation, collaboration, and excellence within the organization, driving employee engagement and retention.
- Community Engagement:
- Noto emphasized community engagement initiatives at SoFi, supporting programs and events that promoted financial literacy, education, and empowerment among SoFi members and the broader community.
6. 4M Score
All of our homework on this company leads up to the 4M Score. A lot of investors only look at the numbers. Yes, it’s important to look at the first M (MOS) which is the math part of investing but it’s also important to look past the numbers and also look at the Meaning, Moat, and Management. If all 4Ms pass, we should have high confidence in buying this stock.
What 4M score are we going for?
- 80-100 = High confidence – Yay! You should have high confidence buying this stock. It passes all 4M!
- 60-79 = Moderate confidence – Alert! There may be better stocks in the market. Only buy this stock if you truly believe the company will improve!
- 0-59 = Low confidence – Warning! There are better stocks in the market. Due to the low score, you should consider looking at other stocks.
👉 The 4M Score of SoFi (SOFI) is 57/100.
To see the most up-to-date 4M Score, please log into Tykr.
7. Is SoFi (SOFI) stock a good buy?
Some of the top questions investors can have is SoFi (SOFI )stock a good buy or should I buy SoFi (SOFI) stock?
Investing in SoFi is smart because:
- SoFi offers a wide range of financial services, making it convenient for users.
- SoFi is growing fast, with more people joining and using its services.
- SoFi gives extra benefits to its members, keeping them happy and loyal.
- SoFi partners with big companies, which helps it grow even more.
- Changes in financial rules can benefit SoFi. However:
- SoFi faces competition, which might slow down its growth.
- Rules and laws could change, affecting SoFi’s business.
- If something goes wrong with SoFi’s technology, it could cause problems.
- The stock market can be uncertain, which could affect SoFi’s stock price.
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To truly know if SoFi (SOFI) is a good stock to buy or sell, we recommend you log into Tykr. Within seconds you can see the Summary, Score, MOS, and 4M Score.
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