7investing reveals the winner of its Market Madness championship matchup between SoFi and Tesla.
March 27, 2023
The time has finally arrived. We’re excited to announce that SoFi Technologies (NASDAQ: SOFI) is the champion of our 7investing Market Madness competition!
Throughout this entire month, we’ve paired stocks in head-to-head matchups to determine which would ultimately will be the best investment for the next three years. Through voting polls embedded into each of our research articles, you helped us determine the outcomes of each matchup.
In the Championship, SoFi paired up against the electric vehicle innovator Tesla (NASDAQ: TSLA). After capturing more than 59% of the final vote, SoFi won by a convincing margin.
Our 7investing advisors agree that SoFi is an intriguing investment opportunity. In fact, we have made it an official Premium recommendation on multiple occasions, most recently in October 2022 (7investing Premium members retain access to all of our former reports for eternity).
SoFi — which stands for “Social Finance” — is a mobile-first digital bank who is wooing customers from larger banks. Most borrowers work with several different banks for the important loans in their life; one for student loans, one for a home mortgage, a car loan, etc. SoFi’s intuitive and popular Smartphone app is increasingly making it the one-stop-shop for all of these borrowing decisions. Its stated mission is “to help people reach financial independence and to realize their ambitions.”
Appropriately, it also has a financially independent and ambitious CEO. Anthony Noto, who formerly served as the COO of Twitter (pre-Elon), is laser-focused on building SoFi into one of America’s ten-largest financial institutions.
He’s doing a fantastic job at succeeding at that so far. SoFi began 2022 as America’s 449th largest bank and ended the year at #149, as it is growing its lending business at 45%. The company’s other division are growing even faster, with revenue from its Technology Platform (think AWS’ marketplace for banking apps) is growing at 62% per year and its Financial Services group (including things like checking, investing, and robo-advisory) is nearly tripling annually at 189%. As a source of funds, total deposits increased 46% sequentially to $7.3 billion — and nearly 90% of that base came from direct deposit members.
Now, SoFi’s difficult decision will be figuring out what to do with all of its money. The American economy is on shaky ground and many fear borrower default rates will rise in a recession. It should also avoid the siren song of long-duration bonds, which led peers like Silicon Valley Bank directly into the rocks with the harpies.
Yet no one in banking ever complained about having a large and growing pool of funds to work with. And with SoFi’s stock priced at only 1.03 times its book value (i.e. the market value of all of its equity, compared to the implied value of it based on its balance sheet), Noto is personally buying shares in the open market on a monthly basis. That’s a huge sign of confidence, to have the captain of the ship buying the stock at the same price that we can as individuals.
Congratulations to SoFi for winning our Market Madness tournament! We’ve enjoyed sharing investing insights and our collaborative polls with you all month and have thankfully welcomed many new Starter members. Please click here to learn more about 7investing’s new Starter membership and to get your first month for absolutely free.
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