3 Reasons to Buy SoFi Technologies Stock Now, and 2 Reasons to Wait

Core Viewpoint - SoFi Technologies has experienced significant stock gains due to outstanding user growth and a unique customer experience, but there are concerns regarding its high valuation and reliance on unsecured loans for revenue [1][2]. Group 1: Reasons to Buy - Outstanding User Growth: SoFi has seen rapid customer acquisition, growing from 5.3 million members and 7.9 million products at the end of 2022 to 11.7 million members and 17.1 million products by June 2023, indicating a strong market resonance [4]. - Room for Continued Growth: The bank has successfully engaged customers with multiple products, adding 1.3 million new products in Q2 2023, averaging 1.5 products per new customer [7]. - Fintech Capabilities: SoFi's acquisition of Galileo has enhanced its technology platform, managing 158 million accounts for various partners, contributing to a revenue of $110 million in Q2 2023, with over 30% of this revenue being profit [9][10][11]. Group 2: Reasons for Caution - High Valuation: SoFi's stock is trading at 5.5 times its tangible book value, significantly higher than established banks, which typically trade at around 2 times. This raises concerns about potential valuation corrections if growth slows [12][13]. - Revenue Reliance on Unsecured Loans: The bank's revenue is heavily dependent on unsecured personal and student loans, with a net charge-off percentage of 4.5% in Q2 2023. The long-term credit performance remains untested in a recessionary environment [14][15][16].