In this clip from Motley Fool Live, recorded on Dec. 9, Motley Fool contributors Marc Rapport, Matt Frankel, and Jason Hall discuss SoFi’s meteoric rise that upended traditional banking and consider why the future might still be bright for SoFi 10 years from now.
Marc Rapport: They’re the real leaders. I’ve worked a lot in the credit union space and student lending on that side. SoFi (NASDAQ:SOFI) was the real leader and disruption of traditional banking on that side.
Jason Hall: Yeah.
Rapport: On that side we call [it] FinTech. They also have a stadium. They bought a stadium, right? The Rams-Chargers Stadium naming rights. That gives them an air of legitimacy. I think it’s just really impressive how much they’ve started from their idea of we’re cool and we’re hip. Do you remember those ads?
Matt Frankel: Yeah.
Rapport: I thought it was a bunch of smoke.
Frankel: They’ve done a fantastic job of growing.
Rapport: Yeah. [laughs].
Frankel: To add to what Mark just mentioned with the air of legitimacy, they are actually becoming a bank. They acquired an actual bank. They’re getting an actual banking charter. They’re going to be able to offer more and more banking products as we go on that they otherwise wouldn’t have been able to because they will actually be a bank. That’s a piece of the puzzle I think the market’s really under-appreciating that they’re actually going to be a bank.
Rapport: It’s really important to be the primary financial institution for someone. You mentioned number of products. Even though for people a lot of these financial services’ products are commodities now, I think there’s still a tendency to stick with one if you can and benefit from that.
Frankel: Wells Fargo (NYSE:WFC) is still my primary financial institution and I have five different financial products with them. Six, if you count the safe deposit box I have in a branch, which SoFi’s never going to offer. But five different financial products that SoFi could potentially disrupt.
Rapport: Keep an eye on those branches by the way. They shut them down.
Frankel: I know. I had to move the safe deposit boxes already [laughs] because the branch closed. But I don’t know, Jason, any parting thoughts on SoFi?
Hall: As long as they continue to execute the way they have, I’m going to continue to own it. I know a lot of investors aren’t as crazy about it as I am. But I’ve become very convinced that this is the one that 10 years from now, I’ll be very glad that I invested in.
Frankel: Yeah, it’s a long-tailed play. It’s going to be a little bit of a roller coaster ride.
Hall: Yeah.
Frankel: It’s already pretty much break-even profit-wise so it’s not a money loser. They have plenty of money in the bank. I guess if they are acquiring a bank and capitalizing it really well, this is not a company that’s going to need to raise capital over and over and over again to fund its growth.
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