Incredibly cautious and conservative vs my view on their future revenues, I think they will grow 40+% in2027 and a CAGR of 26-32% in decent economic conditions for afew years after that, i think on those assumptions Sofi will eventually be a $40 stock in next 18months especially considering multiple premiums from hype cycles + likely S and P inclusion. Is my largest positon.
I wouldn't call it cautious or too conservative, it's really numbers vs strong conviction in this case I believe. :) Nothing wrong with that, you might be actually right and I hope for your position you are, but what you're describing is basically the bull case playing out (which is, again, real possibility and personally I'm more convinced of it than the bear case happening). If SoFi grows 40% in 2027 and then compounds revenue at 26-32% for several more years, my base case is too low and the stock should be worth materially more. But that is a different bet where you’re underwriting execution plus multiple expansion, hype-cycle premium, and possible index-inclusion flows. That can absolutely happen, especially in a momentum market. My base case is trying to separate what I think the business is worth from what the stock could trade at if sentiment really turns. At $40 in 18 months, I think the price is already assuming SoFi is no longer just proving the model but it has basically won the narrative. Has it? Possibly :). But that’s the bull case, not the underwriting base case for me. And again, that's just me. :) good luck with the position Timothy!
It is early days - with the premiums I am about break-even, although they have recently been cut because of the underlying’s price wobble. It’s fairly new so reasonably illiquid up to now. Not
a core holding by any means, but handy for cashflow to give me dry powder.
No need to be sorry, just present your assumptions and numbers that support the claim my analysis is a joke. :) The base case already takes SoFi from $4.7B of 2026 adjusted net revenue to $11.5B by 2035, with 30% normalised pre-tax margins and an 11.2% WACC. That is not bearish. If you think 10.8% is too low, the real question is what 2035 revenue number you are willing to underwrite? $15B, $18B, $25B? My bull case already gets to $17.9B. Above that, you need to believe SoFi becomes not just a great fintech, but one of the dominant financial platforms in the US. Sure, it's possible. But that is the bull case, not an objective base case.
Well, that’s the core disagreement, your base case is my bull case, and that's a matter of conviction and assumptions really, so no right or wrong in there. :) Your model assumes SoFi compounds like an elite platform and reaches bank-level margins very quickly. My base case gives them credit for the transition, but I’m not willing to underwrite $12B revenue and 40%+ margins as the default before the fee-based mix, credit performance and capital intensity are proven through a cycle... If that happens, yes, my base case is too low and the stock is worth materially more. As I said, it's more of a thing of conviction in the company, and I just classify that as the bull case, not my base case. By all means, for all shareholders, I wish you're right!
Yes, your bull case is basically below my base case. This company has so many avenues for growth, especially in wealth management, as its core 747 FICO score student refinancing clients get richer. Boomers are dying, leaving Trillions to their Gen Z and Millennial children who won't use regional banks.
Incredibly cautious and conservative vs my view on their future revenues, I think they will grow 40+% in2027 and a CAGR of 26-32% in decent economic conditions for afew years after that, i think on those assumptions Sofi will eventually be a $40 stock in next 18months especially considering multiple premiums from hype cycles + likely S and P inclusion. Is my largest positon.
I wouldn't call it cautious or too conservative, it's really numbers vs strong conviction in this case I believe. :) Nothing wrong with that, you might be actually right and I hope for your position you are, but what you're describing is basically the bull case playing out (which is, again, real possibility and personally I'm more convinced of it than the bear case happening). If SoFi grows 40% in 2027 and then compounds revenue at 26-32% for several more years, my base case is too low and the stock should be worth materially more. But that is a different bet where you’re underwriting execution plus multiple expansion, hype-cycle premium, and possible index-inclusion flows. That can absolutely happen, especially in a momentum market. My base case is trying to separate what I think the business is worth from what the stock could trade at if sentiment really turns. At $40 in 18 months, I think the price is already assuming SoFi is no longer just proving the model but it has basically won the narrative. Has it? Possibly :). But that’s the bull case, not the underwriting base case for me. And again, that's just me. :) good luck with the position Timothy!
Great analysis
Thank you YL, really appreciate it!
I invest in this stock via SOFY covered call ETF to take advantage of the volatility centred on a fair to slightly undervalued SP.
Interesting Martin! How is it performing?
It is early days - with the premiums I am about break-even, although they have recently been cut because of the underlying’s price wobble. It’s fairly new so reasonably illiquid up to now. Not
a core holding by any means, but handy for cashflow to give me dry powder.
Demand creates the story.
Supply constraints create the returns.
I am sorry, but a 10.8% 10-year revenue CAGR is a joke, so is 30% operating margin in 2030. It will be way more than that.
No need to be sorry, just present your assumptions and numbers that support the claim my analysis is a joke. :) The base case already takes SoFi from $4.7B of 2026 adjusted net revenue to $11.5B by 2035, with 30% normalised pre-tax margins and an 11.2% WACC. That is not bearish. If you think 10.8% is too low, the real question is what 2035 revenue number you are willing to underwrite? $15B, $18B, $25B? My bull case already gets to $17.9B. Above that, you need to believe SoFi becomes not just a great fintech, but one of the dominant financial platforms in the US. Sure, it's possible. But that is the bull case, not an objective base case.
I model $12B revenue and $3.5B net income in 2030. They literally guided for 30% revenue CAGR till 2028.
How come you justify 9%-3.5% revenue growth in 2031-35? That's slower than JPM, Citi, and Wells Fargo. I just don't see that happening.
I model 28% revenue CAGR from 2025-2030. From 2030 to 2040, i could see them growing with 10-12% CAGR.
Also, 30% NOPAT margin in 2035 is way too low. I model 37% in 2030, by 2035 it will likely be 40-45% on par with JPM today.
Well, that’s the core disagreement, your base case is my bull case, and that's a matter of conviction and assumptions really, so no right or wrong in there. :) Your model assumes SoFi compounds like an elite platform and reaches bank-level margins very quickly. My base case gives them credit for the transition, but I’m not willing to underwrite $12B revenue and 40%+ margins as the default before the fee-based mix, credit performance and capital intensity are proven through a cycle... If that happens, yes, my base case is too low and the stock is worth materially more. As I said, it's more of a thing of conviction in the company, and I just classify that as the bull case, not my base case. By all means, for all shareholders, I wish you're right!
Yes, your bull case is basically below my base case. This company has so many avenues for growth, especially in wealth management, as its core 747 FICO score student refinancing clients get richer. Boomers are dying, leaving Trillions to their Gen Z and Millennial children who won't use regional banks.