SoFi’s Latest Acquisition Seeks to Make It the Amazon of Fintech: Should You Invest?
SoFi Technologies stock plunged roughly 8% on Feb. 22, 2022, after the announcement that the fintech company would acquire banking software provider Technisys for $1.1 billion in stock, Barron’s reported. The drop also coincided with a 1% dip in the S&P 500 based on fears of war between Russia and the Ukraine, per Reuters. The tech-heavy Nasdaq Composite, of which SoFi is a part, also dropped slightly at market close on Feb. 22.
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SoFi has had a tough run of it lately, seeing a 50% loss in stock value since November, according to Nasdaq.com. However, the new acquisition is poised to bring SoFi closer to its goal of becoming “the AWS [Amazon Web Services] of fintech,” the company said in a press release. The release stated that the acquisition, “accelerates SoFi’s development of a full-stack, multi-product, digital banking technology platform offering best-of-breed financial products and services.”
Based on the terms of the agreement, which were outlined in the press release, Technisys shareholders will receive approximately 84 million shares of SoFi common stock, which represents less than 10% of SoFi’s fully diluted share count as of Sept. 30, 2021.
For consumers, the merger could expand options for online financial services as it will enable SoFi to better serve its partners and support multiple products — such as checking, savings, deposits, lending, and credit cards — through industry-leading APIs.
“The acquisition of Technisys is an essential building block in delivering on our member-centric, digital one-stop-shop experience for SoFi members and our partners through Galileo, our provider of fintech cloud services,” Anthony Noto, CEO of SoFi, stated in the press release.
The acquisition will also enable Technisys and SoFi, together, to add product offerings to SoFi’s 89 million enabled customer accounts across the U.S., Mexico, and Colombia — and to Technisys’ 60-plus bank, fintech, and non-financial brands, according to the release.
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For investors, the acquisition could accelerate SoFi’s three-year revenue growth rate, adding $500 to $800 million through the end of 2025. Some investors, including Bret Kenwell of Future Blue Chips, are calling SoFi a potentially strong long position. “Analysts are anticipating 44% revenue growth to $1.44 billion for next year,” Kenwell wrote in an article on Nasdaq.com.
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