In last night’s Live Stream, we took a little time to look at Chamath Palihapitiya’s latest SPAC deal, bringing Social Finance, Inc. (SoFi) public through the ticker $IPOE. If you tuned in, read below for some changes to my thoughts.
SoFi offers a suite of lending products and financial services to consumers through its website and app.
- Lending: Student Loan Refi, In-school Lending, Personal Loans, Home Loans, Credit Card
- Services: SoFi Money (savings, debit), SoFi Invest (brokerage), SoFi Credit Card
- Technology: SoFi acquired Galileo, which provides banking technology infrastructure to SoFi and other FinTech companies like Robinhood, Chime, and MoneyLion
- JO: This actually might be a game changer.
Chamath’s thoughts on FinTech:
- Incumbent banks have been hamstrung coming out of The Great Financial Crisis.
- Innovation is emerging rapidly to disrupt these legacy banking practices.
- Future FinTech consumers want low or no fees, fair and transparent lending, and a “one stop shop” for financial needs.
Chamath’s investment thesis on SoFi:
- SoFi has a best-in-class digital “one-stop-shop” solution with 1.8 million unique members in 2020, expected to grow to 3.0 million in 2021.
- It has best-in-class CAC and Churn which will result in best-in-class contribution margins, growth, and huge upsell/cross-sell opportunities.
- At $10.00 per share, it values SoFi at $6.58B, which is 1.6x – 1.8x 2025 Revenue.
I really like SoFi as a business, but the valuation of $IPOE at $20.00 and their growth assumptions give me pause… read the full analysis and conclusion here!
- I break down the valuation and dig into their growth assumptions (and compare against the Robinhood app)
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