Cathie Wood's New Favorite: SoFi Technologies Rises

The investor Cathie Wood, known for her optimistic assessments of Tesla and Palantir, surprises once again. While she perhaps kept many observers on their toes with her previous favorites, she has quietly built a considerable position in the emerging fintech company SoFi Technologies. In her portfolio of exchange-traded funds (ETFs), SoFi now ranks fourth. However, it's not just Wood who sees potential in SoFi: Stock analyst Dan Dolev from Mizuho raises his price target for the stock to $14, representing an upside potential of 36%. A closer look at SoFi's recent results shows why analysts are forecasting tailwinds for the stock. Although the financial services sector is fiercely competitive, SoFi manages to position itself as a strong competitor through its digital offerings. Unlike established banks like Wells Fargo, Bank of America, or JPMorgan Chase, SoFi does without physical branches and offers all financial services online—from loans to insurance to banking and investment services. This digital focus is paying off: As of September 30, SoFi recorded 9.4 million members on its platform, representing a 35% increase compared to the previous year. Even more remarkable: The members utilize more than 13.6 million products, translating to an average use of 1.5 products per member. This clearly demonstrates how effectively SoFi sells its additional services to existing users. The strategy of establishing itself as a comprehensive provider for various financial needs could prove to be extremely lucrative for SoFi in the long term. Already in the third quarter, the company was able to increase its revenue by 30% compared to the previous year to $689 million and achieved more than $60 million in net profit—the fourth consecutive quarter with a positive balance.