Humble_Increase7503 t1_ja1xyjn wrote on February 26, 2023 at 5:57 AM

Reply to comment by DYTTIGAF in Why SoFi is Poised to Take Over the Fintech Industry: An In-Depth Analysis by [deleted]

They’re growing at an obscene rate. You can’t just disregard that and then talk about how they’re wasting money on ads and not making money.

I mean, you can, but it begs the question of why you’re in a non profitable growth stock in a high rate environment

And rising rates put them into bankruptcy!?

They have a banking charter, they take advantage of that rising rate environment as well.

And they’re not that far away from being profitable. -40m net income q4 2022, ~-.05 eps. I mean, given their growth, that seems a bit extreme.

Particularly with the CEO buying $7m worth of shares in 1 week in December. Shit he’s been buying a fuck ton of shares tbh. Like tens of millions of dollars worth for months now. Seems strange behavior for a company in the fast lane for bankruptcy.

while stock based comp is to be expected, it remains an irritation. ~$70m in SBC last quarter alone is crazy. That being said, it’s been trending down the past 2 quarters, hopefully that continues.

DYTTIGAF t1_ja2139i wrote on February 26, 2023 at 6:34 AM

SoFi debt models (include FICO scores from customers) which will not allow most of their debt to be securitized. That is, sold off (meaning that they will have to warehouse alot of their products themselves). This is not what they want to do. It's not their business models.

It's the same problem Carvana has had over the last year. Resulting in a 90% drop in their stock price and taking them to the brink of bankruptcy.

You cannot run a "financial production" company with the cost of capital increasing by a factor of 5X in under 18 months.

The 30% decline in market value since the beginning of the year reflects this accurate price discovery by investors.

Humble_Increase7503 t1_ja2fjx7 wrote on February 26, 2023 at 9:40 AM

It’s up 15%+ since the beginning of the year, unless you meant since the beginning of 2022, to which I say, find me a non profitable growth stock that isn’t down, a lot, since then

Carvana is not a reasonable comparable at all

SnipahShot t1_ja2m1jw wrote on February 26, 2023 at 11:08 AM

>while stock based comp is to be expected, it remains an irritation. ~$70m in SBC last quarter alone is crazy.

Not really an irritation, it is insignificant. For one, it is a non cash expense.

And for two, a large portion of that expense is related to PSUs that were awarded after the IPOE process, PSUs with price targets of 25, 35 and 45 (volume weighted average for over 90 days) within 5 years of IPOE. Whether these vest eventually (one or all) doesn't matter one bit, will anyone complain if the stock price is at $45 within the next 2-3 years? Or at $25? If they don't vest then no dilution happens making it pointless.