Has anyone collected SOFI shares lately?

The reason I put $SOFI in my portfolio

The market is giving too high a price to the fear of credit and too low a price to the flexibility of the platform, in the case of SoFi, which is why I think it's one of the strangest things on the market right now.

The business is still performing very well, but the stock is stuck in one of the worst sentiment groups, as the market does not require exposure to credit-sensitive stocks in a higher interest rate environment for longer, and SoFi is still viewed as a banking lender, even though the business is much broader than that.

The Loan Platform (LPB) business is more important than people realize because SoFi created $3 billion in personal loans instead of third parties through the LPB this quarter and added another $3.6 billion in capital ratios from three new partners. That's important because it gives SoFi the flexibility to choose which loans to keep on its balance sheet and which loans to push through its partners for fee income without taking the same balance sheet risk (a model unlike traditional lenders that must hold everything).

This is why the fear of private credit seems less frightening. If you really listen to earnings calls, one of the biggest bear arguments is that funding partners will withdraw if credit conditions weaken. But Noto says they don't see a problem in performance or demand from partners, and demand for LPB is still higher than they choose to fulfill.

Member flywheel is still the main reason for me still holding it, because this is really moat that the market overlooks. SoFi added over 1 million subscribers in the quarter. ~ 45% of new products came from existing subscribers, and 50% of SoFi Plus subscriptions used other products. That is, the more subscribers it added, the more cross-sold the product, the more deposits it collected, the more revenue per subscriber, and the more efficient the platform (the way SoFi is worth more by the time). SoFi Plus became a paid subscription is a pleasure because of the fee revenue. Recurrent over a growing user base can improve unit economics with time.

The biggest thing I want to see next is the Tech Platform that turns the ship around, which of course is the weakest point. Technology Platform revenue dropped 27% YoY to $75 million, contribution profit dropped 61%, and all accounts dropped because the big customers who moved out of the management platform are rebranding. It's SoFi Tech Solutions, and it's divided into processing, banking core ledgers, payment hubs, and risk and fraud. If the platform starts to grow again, it's good. But I see this as a free call option for holding SoFi.

I really believe that SoFi is a good business caught in a bad sentiment bucket. The market is focusing on weak interest rates, credit risk, and technology platforms. While I focus on members, cross-buy deposits, loan platform flexibility, operating leverage, and the long-term path to becoming a leading financial institution.

It can definitely go down if the market sells out or the fear of credit comes back, but I think the business is stronger than the stock movement indicates, and I don't have a problem keeping it, because the market will definitely be interested in companies that are fundamentally good.

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