SoFi's Big Move into Crypto: What's Next for the Stock?

SoFi Technologies has recently taken a significant step into the crypto world by launching its own stablecoin, SoFiUSD. This move is part of a larger strategy to expand its presence in the blockchain space, following the launch of SoFi Crypto. The company is leveraging its status as a regulated national bank to offer a stablecoin that focuses on improving payment flows and liquidity movement, rather than just speculation. SoFi Technologies is a digital financial services company based in San Francisco, California. It offers a wide range of services, including lending, banking, investing, credit cards, and financial planning, all accessible through a single mobile platform. The company's national banking charter gives it a regulatory edge over other fintech competitors. With a market capitalization of $32 billion, SoFi is considered a large-cap fintech company. The stock of SoFi Technologies has seen significant volatility over the past year, ranging from a low of $8. 60 to a high of $32. 73. Despite a strong appreciation over the past year, the stock is still trading below its recent peak, currently around $27 per share. However, it has outperformed the overall market in the past 12 months. Valuation-wise, SoFi has high multiples, with a trailing P/E of 84x and a forward P/E of 68x, indicating expectations of continued earnings growth. Its P/S multiple of 11. 4x is premium compared to traditional banks but comparable to other infrastructure-driven fintech companies.SoFi recently reported strong Q3 earnings, with EPS doubling from the previous year to $0. 11. Net revenue increased by 38% to $961. 6 million, and net income surged by 129%. The company also posted its eighth consecutive profitable quarter on a GAAP basis. Adjusted EBITDA increased to $276. 9 million, with an adjusted margin of 29%, and adjusted net revenue hit an all-time high of $949. 6 million. Membership growth accelerated, with 905, 000 new members added in the quarter, bringing the total to 12. 6 million. Product adoption rates remained high, with 40% of new product accounts coming from existing members. The introduction of SoFiUSD aligns with the company's strategy of fee-driven growth and infrastructure monetization. The stablecoin is designed to benefit SoFi's customers and also provide infrastructure on a white-label basis for other banks and fintech companies. The CEO, Anthony Noto, believes that blockchain technology is in a supercycle and that SoFiUSD can help overcome issues like slow settlement times and lack of transparency in reserves. While SoFi has not yet provided revenue guidance for the stablecoin business, its inclusion with other high-margin revenue sources suggests it will contribute to long-term revenue growth. Analysts have a neutral stance on SoFi stock, with a consensus "Hold" rating and a price target of $27. 69, close to the current stock price. Analyst targets vary widely, from a high of $38 to a low of $12, reflecting differing opinions on the company's growth potential and profitability.