SoFi was featured in a multi-company themed tweet thread, and I’ve extracted SoFi’s portions from it. I’m summarizing the tweet’s key points, and the tweet itself is below.
SoFi is building a comprehensive digital financial services platform by combining loans, banking services, and investing into one ecosystem.
The company utilizes its own bank’s low-cost deposits to support its lending operations and grows revenues with additional services; furthermore, its technology platforms serve other fintech companies. SoFi is growing profitably and aims for strong scaling, especially among young adults.
The tweet below compares SoFi and Chime. Chime is quite unfamiliar to me. Chime’s listing is on June 12.
Upon closer inspection, the tweet indicates that SoFi stands out in almost all metrics – member growth, revenue, profitability, and valuation. SoFi’s member count has grown by 41 percent over three years, while Chime remained at approximately 22 percent. SoFi’s revenue and average revenue per user have also been significantly better.
Furthermore, SoFi has already achieved sustained profitability and a positive net income, while Chime is still struggling with unprofitability. Although the companies are at different stages of development, SoFi’s valuation (relative to revenue) is more attractive. SoFi also benefits from a broader range of services and a wealthier customer base. Additionally, the tweet emphasizes that, overall, SoFi appears to be a clearly stronger investment target than Chime just before its listing.
Below is a tweet stating that SoFi and Robinhood do not compete against each other, but rather are transforming the financial industry from different directions. SoFi is building a comprehensive digital bank that combines deposits, loans, and investments, among other things. Robinhood, on the other hand, is developing a user interface that makes investing easier than before.
However, both are challenging traditional banks and brokers. The tweet below has more on the matter.
SoFi is rebuilding finance from the ground up. It owns the stack: deposits, lending, credit cards, student loans, investment accounts. It’s vertically integrated under a national bank charter… something most fintechs never even touch. And that charter isn’t a vanity play. It’s how SoFi offers 3.8% on savings, gets early access to IPOs, and continues scaling lending volumes quarter after quarter.
My guess is that Robinhood and SoFi will become similar fintech giants over time.
Robinhood is currently not allowed to buy a bank because it handles cryptocurrencies, and conversely, SoFi is not allowed to handle cryptocurrencies because it is a bank. These restrictions could be removed quickly. Both companies aim to serve as wide a range of customers as possible on their own platforms and expand rapidly abroad.
I’ve missed this before, but SoFi apparently intends to utilize cryptocurrencies in money transfers. Could someone smarter here assess if this could be a competitive advantage compared to traditional banks, e.g., through transfer speed or lower costs?
Could someone smarter here assess whether this could provide a competitive advantage over traditional banks, e.g., through faster money transfers or lower costs?
I’m probably not smarter, but I’ll still give my own view. Transferring money using a blockchain (fiat => stablecoin => fiat) is significantly faster and cheaper than current systems, where every middleman takes their cut and a transfer can take several days.
On a side note, Anthony Noto said in a Mad Money episode that money transfers would be done using Bitcoin. I don’t recall seeing this statement corrected anywhere, but I assume this was just a slip of the tongue and in reality, the transfer is done with a stablecoin (USDC). There’s no sense in using Bitcoin due to its volatility.
In my view, the use of stablecoins will grow very rapidly in such applications, and there’s no reason why large banks wouldn’t adopt the same system quickly.
I hope that Galileo will soon be able to offer a backend for stablecoins, allowing companies (Walmart / Amazon, etc.) that might want their own stablecoin to purchase the service from Galileo.
could this provide a competitive advantage over traditional banks
So, in short. In my opinion, this single money transfer service will not provide a (permanent) competitive advantage, but the general shift of services to crypto is, in my view, a big opportunity for Galileo.
Q2 results are out. Quite strong growth indeed, and they are raising 2025 guidance. Happy to be on board.
Adjusted Net Revenue up 44% to a record $858 million
Adjusted EBITDA up 81% to a record $249 million
Fee-based Revenue up 72% to a record $378 million
Member growth up 34% to a record 11.7 million members
Product growth up 34% to a record 17.1 million products
Management Raises 2025 Guidance
SoFi’s quarter was strong. Revenue grew significantly and profit improved considerably compared to the previous year, in addition, interest income was on a good rise and membership growth was tremendous, reaching a new record.
CEO Anthony Noto stated that growth was the fastest in over two years. New products were launched, services were developed, and various payment-based revenues also grew strongly. According to the SoFi CEO, the company continuously invests in innovation and strengthening its brand.
The company raised its outlook for the rest of the year and plans to accelerate product development even further. This, combined with strong customer growth, provides a good foundation for the coming years.
Noto emphasized again that a solid foundation is being built and future growth will not be risked for the sake of quick profits. We are eagerly waiting to see how that money will be used.
Short term pain, long term gain. Quite certainly some acquisition related to crypto is coming (I even believe there will be news about this in the coming days). They’ve been hinting at this for a long time. Noto is a hell of a smart man with bonuses in his sights, so it’s unlikely this was done for nothing.
Our registered offering successfully closed! SoFi significantly strengthened its already strong position with greater strategic and financial flexibility. As discussed in connection with our Q2 2025 earnings release, SoFi’s capital position was already adequate for our plans and more than adequate relative to our required capital ratios. Which may beg the question…why raise more capital?
Here is our perspective on what this additional capital means for SoFi and our members. This opportunistic capital raise:
Is a proactive step to provide flexibility to pay down expensive debt and to further strengthen SoFi’s ability to consider opportunistic acquisitions (though none are currently contemplated).
Gives SoFi an even stronger position for potentially greater growth (organic or inorganic) than we currently have planned and communicated over the intermediate to long-term horizon.
Increases SoFi’s net cash position, and the additional net interest income from greater net cash would reduce interest expense, assuming a pay down of debt. As such, the combination is neutral to EPS.
In essence, this additional capital will fuel continued innovation and growth as SoFi strives to help members get their money right. Thank you to shareholders for their support!
SoFi’s valuation has risen tremendously recently, but according to the author of the tweet thread below, its valuation is still low despite that.
Although the stock price has climbed significantly, the tweeter sees a combination of strong growth and potential undervaluation still offering significant opportunities for investors.
In his opinion, the markets have not priced in its full potential. The main point of the tweet thread is likely that even though the price has risen sharply, it still does not account for its future growth potential.
For one, Incremental Adjusted EBITDA Margin was 43%, meaning $SOFI has the potential to expand Adjusted EBITDA Margins to as high as 40%. In addition, the big banks have Net Margins of as high as 30%+. This means that $SOFI has the potential to 3x its current Net Margin. In other words, $SOFI’s profitability journey is still very early.
