{"id":45862,"date":"2023-08-08T08:49:18","date_gmt":"2023-08-08T12:49:18","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/sofi-technologies-strong-q2-is-a-step-toward-q4-profitability\/"},"modified":"2023-08-08T08:49:21","modified_gmt":"2023-08-08T12:49:21","slug":"sofi-technologies-strong-q2-is-a-step-toward-q4-profitability","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=45862","title":{"rendered":"SoFi Technologies: Strong Q2 Is A Step Toward Q4 Profitability"},"content":{"rendered":"
\n
<\/picture>
<\/figcaption><\/figure>\n

Since my last article, SoFi Technologies (NASDAQ:SOFI<\/span>) has climbed more than 45%. I still believe the second half of the year will be the pivotal point for the digital bank due to the return of student loan payments next October. While the Q2 earnings were a mixed bag for me, the company still had a pretty decent quarter with a revenue beat, adding members at an above-average rate, and impressive growth in loan originations. Looking at the bigger picture, the digital bank quadrupling its market share of new checking accounts opened is a great indicator of its future growth, especially since it outpaced other digital banks, which is why I\u2019m reiterating my SoFi strong buy rating.<\/span><\/p>\n

SoFi\u2019s Growth<\/h2>\n

According to a study released by Cornerstone Advisors, American digital banks have increased their share of new checking accounts opened in 2023 to 47%, while regional banks and megabanks have declined to 21% and 17% respectively.<\/span><\/p>\n

\"Percentage <\/picture>
\n

Cornerstone Advisors<\/span><\/p>\n<\/figcaption><\/figure>\n

While this by itself would be a great indication of the future of SoFi and digital banking, what is more impressive is SoFi quadrupling its market share from 1% in 2020 to 4% in 2023. With that, SoFi would\u2019ve bypassed Wells Fargo (NYSE:WFC), which has seen its share of accounts opened drop from 8.1% to 3.5%.<\/p>\n

While this doesn\u2019t necessarily mean that people are ditching mega banks in favor of digital banks since you can have an account in more than one bank, it indicates that people are more open to the idea of digital banks. That is probably due to the bulk of new accounts belonging to relatively young customers, with 72% of new checking accounts belonging to Gen Z and Millennials. With more than 28.87 million Gen Z Americans under the age of 18, this number will further increase since 4 million Gen Z-ers open bank accounts per year.<\/p>\n

Q2 Overview<\/h2>\n

<\/span><\/p>\n\n\n\n<\/colgroup>\n\n\n\n\n\n\n\n\n
<\/td>\n\n

Q2 2023<\/p>\n<\/td>\n<\/tr>\n

\n

Members Added<\/p>\n<\/td>\n

\n

584<\/p>\n<\/td>\n<\/tr>\n

\n

Members<\/p>\n<\/td>\n

\n

6,240<\/p>\n<\/td>\n<\/tr>\n

\n

Adjusted Net Revenue<\/p>\n<\/td>\n

\n

$488<\/p>\n<\/td>\n<\/tr>\n

\n

Revenue\/Member<\/p>\n<\/td>\n

\n

0.080<\/p>\n<\/td>\n<\/tr>\n

\n

Operating Expenses<\/p>\n<\/td>\n

\n

$547<\/p>\n<\/td>\n<\/tr>\n

\n

Net Income<\/p>\n<\/td>\n

\n

-$48<\/p>\n<\/td>\n<\/tr>\n

\n

EPS<\/p>\n<\/td>\n

\n

-0.06<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

<\/span><\/span>