I Just Found SoFi's New SECRET WEAPON! 😲

Hey, welcome back subscribers. So one of our Discord members actually just reminded me that I never actually gave you guys an update on SoFi's earnings. So I thought we would just kind of quickly run through that today and we'll talk about why the stock initially dipped after that report but then started rebounding a couple days after. We'll also look at the current price and whether I still consider it a buy at these new levels here and I'll even share the most important detail that I found in the report that nobody seems to be talking about. I actually think it's probably the most bullish point there when it comes to SoFi and it's even a bit of like a secret weapon in my opinion looking out into the into their future. So smash that like button, make sure you're subscribed. You can use the link down below too to join our Patreon that gets you access to our community Discord and a bunch of other cool perks. So please check it out if you haven't already and thank you to everyone that does support the channel. With that said, let's go ahead and jump into it. So I'm pulling up the stock chart here. Well, we can see that initially SoFi did actually drop pretty hard on those earnings. I think it fell by like another 10% plus right out the gate but later it did start bouncing right back up going into this new week. Although it is still technically negative over the past month and from the highs it's actually still down close to half its entire value. Now we'll come back to that valuation here in just a second when I talk about why I do still consider this to be a great pick up here at these levels but before we do that I think we should just kind of quickly cover those earnings and why the stock might well why the stock dipped and then why it might also be bouncing back now going into this new week. So let's start first here with why it initially dipped on earnings. Well, I would say that it really came down to two main things here. Now first off, the segment that houses their technology platform did struggle a bit. Now for those that don't know, SoFi doesn't just offer a consumer banking. They also have a business to business side where they provide the back-end digital payment tech for other companies, too. And in the second quarter, the revenue for that specific tech actually fell by a whopping 23% while profits for the segment sunk even more at a 65% plummet. Now, management explained that this drop was mostly because they recently lost a really large client late last year, which is another mobile banking fintech called Chime, and that really made this comparison year-over-year look much worse. And even I would say an even bigger reason for the sell-off was, in my opinion, I think it I think a lot of it had to do with the guidance that they gave for the rest of the year, too, going into Q3 and Q4. I see management actually raised their full-year revenue forecast, telling investors that they now expect a really healthy 32 to 35% growth rate in 2026. However, despite that rise in sales, they actually chose to keep their profit guidance exactly the same. So, Wall Street took all of these numbers and basically said, "Hey, if you're going to make more revenue than you thought, then shouldn't you also be making more profit, too? What What's the deal here? There's a bit of a disconnect there." Well, if you dig a little deeper, management actually did give a couple good reasons for why they're holding that profit guidance kind of leveled. Now, first off, CEO Anthony Noto explained that the overall macro environment has shifted recently, where at the start of the year everyone was expecting the Fed to actually cut interest rates at least twice this year. But now, expectations have completely flipped with everyone really bracing for actually, you know, maybe a couple hikes instead. And the problem with this is that it makes their lending environment a bit tougher because as borrowing costs go up for consumers and even businesses, well, you tend to get a weaker demand for, you know, all of those expensive loans with fewer people wanting to take them out now. And even the people that do actually, uh, you know, still decide to borrow money, well, they're now at much higher risk of not being able to pay it all back if if everybody's kind of struggling. So, because of it, SoFi is simply saying, "Look, we don't know exactly what the Fed is going to be doing here and how much it'll impact the macroeconomy." So, even though we are doing, you know, very well by the numbers and things are looking up on the on the top line, well, we should probably still be cautious about the bottom line here. And as an investor, I don't have any issue with that whatsoever. I'm sure that the, um, you know, the short-term traders probably hate it, but as a long-term investor, I want as much transparency, um, from the management team as possible. And I want to know all about these risks here well ahead of time instead of, you know, possibly being surprised by them later on. Now, there is, however, one more piece to this, and that's that their CFO also noted how SoFi simply has too many great opportunities to be investing their money back into the business for right now. Essentially arguing that, you know, because they have so many like attractive growth areas to to capture new market share in, right? And in in the, um, the global, uh, you know, finances market, there's so many areas that SoFi can actually still tap into new ways of growth and even steal market share from like legacy banks and so on. Well, it just makes a lot more sense to actually be spending any extra money that they have on growing the business long term rather than just forcing a higher profit number right now, putting all, you know, all your focus in on that just to make Wall Street happy in the short term. Which again, as a long-term investor in this company, I I have zero issues with that whatsoever. I think it's exactly what a high-growth company like this should be doing the whole way through, focusing on the long term, focusing on the growth, and the profits will come later. And I'll even, um, explain to you why here in just a second. But um yeah, to kind of summarize there, that was mostly the bad news of it. Now, the good news is frankly stacked with so many positives to note. And I think investors maybe just took a little while to let that digest because maybe now they're kind of realizing just really how good of a earnings report it really was, at least in my opinion. But let's just run through some of the numbers here. I'll just give you the facts and you can you know, decide for yourself. But first off, SoFi brought in a record-breaking 1.2 billion in sales, which was up a whopping 40% year-over-year. Uh they also beat analyst expectations on the bottom line, posting EPS of 12 cents a share, which was up even more at a 50% rise from the 8 cents that they reported last year. Uh their adjusted EBITDA also grew 44% to another all-time high of $358 million. And their core lending business uh reached an all-time record of $14.8 billion in loan originate originations during the quarter. And that was up um 69% year-over-year. Uh by the way, as that lending business continues to grow, it's going to make them even more profitable over time, um which is something I've been arguing for for a long time. That's why I really don't worry about profits when it comes to SoFi. I know that they're just down the road. I know that they're coming over the longer term. And a big part of it is because of their official bank status now. You see, before that, um whenever SoFi wanted to lend out money, they really had to borrow that cash from expensive institutional lenders, just like, you know, most other fintechs have to do even right now still. But because SoFi is officially a real bank now, um over 90% of all of of their um loans are actually funded directly by regular customer deposits in SoFi checking and savings accounts. And paying interest on those deposits is so small by comparison for SoFi. It's like it's it's incredibly smaller and it's so much cheaper than having to pay the much higher rates that you would have to with, you know, bigger lenders. Um so, SoFi is at this point now actually the real the raw number here is that they're literally saving over $700 million a year now in interest expenses alone. Okay, so that right there just tells you how incredible of a move this has been for SoFi it's benefiting them by so much. Now, this really widens their net interest margin and I think that it's just going to be, you know, really a game-changer for setting SoFi up to be not only a high-growth fintech but also now as an official bank here it's going to slowly become more and more profitable over time, too. So, you really get the benefits of both like a growing fintech, you get the high growth, but you also get you're starting to get the higher margins that you typically get from legacy banks. And once those two come together, this thing I mean that's really where I see the the long-term potential in a in a company in a stock like this. Now, um speaking of those uh member deposits, by the way, right? We're talking about how that's funding some of their loans. Well, speaking of that, well, those are going to continue to grow, too, because one of the most exciting parts of the entire um earnings report here was in their record-breaking customer gains having added a record 1.1 million brand new members in just this one single quarter alone. And that's bringing their total user base up now to 15.8 million people, which is a 35% increase from where they were last year. So, to summarize here for you guys, they're making more money than ever, uh originating more loans than ever, and they're adding more users than ever before, too. And yet all of this wasn't even my favorite part. In fact, I actually think SoFi has a bit of a secret weapon up their sleeves here and it's what this record-breaking user base is actually doing on the SoFi platform that has me feeling more optimistic as an investor than anything else. And it's a huge deal for their profitability long term, as you'll see. But, um yeah, to kind of run through here. See, last quarter, SoFi added a record 2.2 million new products. And that was up 42% year-over-year. So, a huge rise in products, and that now brings their total up to 24.4 million. Now, just as important, this is actually the very first time that they added twice as many new products as they did new members. So, why does that matter? What does that tell us? Well, what this means is that a staggering 51% of all of those new products were actually opened by existing SoFi members. Now, to put that in a perspective, a year ago, that number [clears throat] was much lower at 35%. Last quarter, it was at 43%. Well, now it's accelerated all the way up to 51%. And what this means for me is that, you know, it basically validates everything that I've been preaching about SoFi for for years now, that over time, you're going to see their flywheel strategy take off of selling more and more products to their existing customer base because of this really all-in-one kind of platform that they've created. And this will become almost like a snowball effect where their financials just continue to get bigger and bigger over time. They not only steal younger customers from big banks, but they continue to cross-sell them more products over time, too. Again, it's something that um actually accelerating over time, and these numbers prove it. Plus, it's not only this not only adds more growth to SoFi, but it also makes the platform more sticky and even more valuable to that customer base, too, because, you know, the more that they use it, the more entrenched they become in that ecosystem, more likely they are to to stick around. It's very similar to like how Apple um has their ecosystem, and and their users are always so scared to switch over to Android because, you know, they already have, you know, an iPhone, an iPad, an iMac, an Apple Watch, maybe Apple TV, all the services within that entire ecosystem. And so, they don't want to have to start all over with something else. Well, that's why I believe um so much in SoFi stock long-term because unless management does something incredibly dumb here to piss off their entire user base, I really think those customers are just like not likely to ever ditch the platform, especially the more entrenched they become in the ecosystem. And right now, you know, the average SoFi member is already using over 1.5 different products, which is at an all-time high. I don't really think that number is going to continue to grow higher in the future, too, you know, especially the more that SoFi innovates on everything, the more features they launch, the more products they're going to be selling, and the more that their customers are going to be using it. Again, with new features like their AI-powered financial advisor, SoFi coach, I think that's going to be big. Um offering new AI investment agents through their new acquisition of Composer. Well, as all of this starts to really happen and take off, you're going to realize that this is just a company that is, again, firing on all cylinders right now, and I don't see it slowing down anytime soon apart from something that just I think would be completely out of their control, out of their hands, like the macroeconomy tanking, which again, they at least are warning us about to some degree, so you shouldn't feel too surprised by anything that pops up there. We know already, actually, that the economy is super shaky right now. And honestly, just the fact that SoFi is still performing so well even with all the craziness going on in the world these days, I just feel like, you know, very confident holding onto this one long-term at this point. And it's quickly becoming one of my favorite holdings. And to top it all off, I mean, considering all the growth, you would think that the valuation here would be like through the roof for a high-growth fintech like this. Um but no, because of the dip, their PEG ratio is actually sitting at less than 0.7, which on its own is already a great value, but it's also more than 30% lower than the sector median too, just to make it even better. So, um yeah, I plan to continue buying shares of this stock. I like it here and that's just how I feel about those earnings. Overall, I really like what I saw. I thought they were fantastic, but what do you guys think? I'd love to hear your thoughts. Is SoFi stock a buy at these levels or do you think it's maybe overhyped during a very shaky macro environment that could be slowing down in the near future? Let me know all of your thoughts down below in the comment section. But hey, I just hope you enjoyed this quick little earnings breakdown and more videos coming for you soon, so stay tuned. But thanks again for stopping by. I hope you're all doing well. Take care, my friends. Bye-bye. >> [music]