 Hey everyone, this is Dan. The banking stocks have dropped a lot in the last two months because of the failures of the Silicon Valley Bank, signature bank, First Republic Bank, and Credit Suisse. Many investors are worried that other banks might fail also. There is, however, one bank, the SoFi Bank, which has been growing and is in a very solid financial situation compared to the other banks. This might be a good opportunity to buy SoFi stock on the cheap. In this video, I will show you why the price of SoFi can possibly double within the next couple of years. First of all, let's look at how SoFi has been trending in the last year. Compared to the broad market, QQQ is up 8%, the SPI ETF is up 3%, and the Banking ETF XLF went down 4.8%, SoFi went down 9.4% in the last year. The reason why SoFi has dropped more than the broad market and dropped more than the banking sector in general is probably because SoFi is a relatively new bank. They got their regulatory approval to become a national bank just in January of 2022. So far, they have not been making a profit yet. The revenues and EPS trends, however, are saying that they will be profitable in 2023, which is the main reason why I bought SoFi shares. If you look at the last 10 days, SoFi went through this dramatic dip on May 1st right after the Q1 earnings announcement. I believe this is due to the sell on the news mentality. The bank actually reported pretty good revenues and earnings. I will go into the details of the Q1 report in the next few minutes. SoFi bank's official name is SoFi Technologies. They are an online bank. They have three operations, lending, technology platform, and financial services. In the Q1 earnings report, they show that they had record gap and adjusted net revenue for the first quarter of 2023. And their net revenue was up 43%. Their adjusted EBITDA of $76 million was up 772% year-over-year. Their total members was up 46% year-over-year. And their total products were up 46% year-over-year. Management raised their full year 2023 guideline. So everything looked very positive. When you look at the chart for the quarterly revenues, you can see that it's been growing steadily. The quarterly ETF started with a big negative number here, but has been progressively getting closer to zero. And they are about to break even and start turning a positive EPS by the end of 2023. When I plotted the quarterly revenues and costs for SoFi and extrapolated the lines into the future, I see that SoFi will most likely become profitable around July of 2023. This is one of the reasons why I believe it is a good time to buy SoFi stock. If you like what you've seen so far, I'd like to suggest for you to click the like, subscribe and notification button that'll enable you to get notified when I publish my next video. It'll also encourage me to make more videos like this in the future. Thank you very much. We have a lot of interesting stuff to cover. Let's continue. There are more positive points about a bank. I will cover them in the next few minutes. These are financial charts from the Better Investing Stock Selection Guide database. The black line is SoFi. The blue line is the industry average. As you can see, SoFi's sales have been growing much faster than the industry average. The pre-tax profit on a sale has been growing also faster than the industry average. The debt to capital ratio has improved in the last couple of years and is now as good or better than the industry average. The return on equity is a little lower than the industry average for now, but hopefully that'll improve in the next few months as they start generating positive EPS. Let's look at how much SoFi is worth. I started with checking the PE ratios for the leading banks. I also looked at Block and PayPal, the two very large online financial companies. We can see that the PE ratios range from 6.3 to 26. Those are the online players Block and PayPal commanding the higher PE ratios. You remember the chart that we showed a few seconds ago for SoFi? I extrapolated that chart all the way to the end of 2024. I then added up the projected net income for 2024 and calculated the EPS based on the number of shares outstanding today. I assume a PE ratio of 5, which is very conservative compared to the PE ratios of these other financial entities. I arrived at the calculated stock price of $20.67 for the end of 2024. Based on these calculations, I projected a very conservative price of $14 a share for SoFi to be reached by the end of 2024. Let's see what the professional analysts have been saying about SoFi. Compared to the last time I looked at this chart, which was April 11, 2023, the closing price went down a little bit from $5.97 to $5.47. My target remains the same at $14 a share by the end of 2024. Yahoo Business lowered their average price target from $7.88 to $7.5 and keeping everything else the same. Blue is neverlayer actually upgraded SoFi's fundamental rating from a C to a B. TipRanks.com lowered their average price target from $8.2 to $7.63 and lowered their low price target from $6.5 to $5. CNN Money lowered their median price target from $7.75 to $7. Overall, the changes were not very significant. Since 2022, five analysts initiated their ratings on SoFi, indicating that the bank is getting more attention from the investment community. There were two upgrades between May and September of 2022 and a recent downgrade on May 2, 2023. One of the reasons for the downgrade is probably because the management did not have a strong enough guidance compared to the expectation of some of the analysts. But overall, the management is still predicting that the bank is going to start generating a positive EPS by the end of the year. Let's address the market concerns first. First of all, the recent bank problems after the failures of Silicon Valley, Signature Bank, First Republic Bank and Credit Suisse are affecting the stock prices of the other banks. And people are worried that some of the other banks might fail because of the continued interest rate hikes by the Fed, which caused the bank's long-term investments to depreciate in values. And SoFi stock dropped 22% in the three days after the Q1 earnings announcement. Although SoFi actually beat both the top and bottom line estimates. Nevertheless, it's a cause for concern. SoFi now expects that 2023 adjusted net revenue of $1.95 billion to $2.02 billion, which is up from its previous range of $1.925 to $2.00 billion. At worst, the company's annual revenue could fall below the average analyst's estimate of $1.97 billion, and that's one of the reasons why the stock price fell after the Q1 earnings report. The other reason, of course, is the sell on a news mentality I mentioned earlier. With people worrying about bank failures, I decided to do more research on this topic. The downfall of Silicon Valley Bank was mainly due to the Fed raising interest rates by more than 5% in the last year. The securities held by the banks that they bought more than a year ago when the interest rate was very low are, therefore, worth a lot less money when the banks try to sell these securities today. Based on GAAP, the generally accepted accounting principles, the banks are supposed to classify the securities they hold into these two categories, available for sale or held to maturity. For the available for sale securities, the banks are supposed to report on their income statements that unrealized losses due to these securities. They don't need to report unrealized losses for securities that are marked as held to maturity. Let's see how SoFi Bank classified their securities compared to Silicon Valley Bank and JP Morgan Chase. From this chart you can see that SoFi Bank classified 100% of its securities as available for sale. They're not hiding anything under the held to maturity category. Whereas Silicon Valley Bank only classified 35% of its securities as available for sale and JP Morgan Chase classified 33% of the securities as available for sale. If you look at their unrealized losses as compared to their net incomes, SoFi Bank's unrealized losses due to these available for sale security is only 2% of the net income. Of course, they have a negative net income. That's why it's a negative 2%. Whereas Silicon Valley Bank, the unrealized losses were 853% of the net income. That's a huge number. And JP Morgan Chase, their unrealized losses were 58% of the net income. That's for 2022. To sum it up, I believe the way SoFi Bank is accounting for these securities is very conservative. They are already showing the worst case scenario in the income statement. They're not hiding any unrealized losses under the held to maturity category. Silicon Valley Bank, on the other hand, had a taking time bomb with huge amounts of unrealized losses compared to the net income. The Silicon Valley Bank time bomb eventually exploded when customers started to withdraw vast amounts of money that caused the bank to turn unrealized losses into actual realized losses. In its final days, Silicon Valley Bank probably had to sell some of the securities that were marked as held to maturity as well. From this chart, we can see that SoFi Bank is in even better shape than JP Morgan Chase when it comes to unrealized losses. There are other indications that tell us SoFi is a much stronger bank than Silicon Valley Bank. First of all, SoFi's total deposit has been growing in 2022, while total deposited Silicon Valley Bank was dropping quickly in 2022. 90% of the SoFi deposits are under $250,000 per person per account and therefore insured by FDIC and over 95% of the Silicon Valley Bank accounts were uninsured. SoFi's unrealized losses are 0.1% of the deposits and SVB's unrealized losses were almost 9% of the total deposit. SoFi Bank has some other strengths as well. Their unbalanced sheet, delinquency and charge off rates are still below the pre-COVID levels. SoFi manages delinquency risk by maintaining extremely high credit standard. The weighted average FICO of their borrowers is $730,000 and they have a hard cut off at FICO score of $680,000 below which they would not lend at all. And SoFi purchases hedges against interest rate movements and that's why the unrealized losses have been so low and SoFi checking and saving members will be able to protect the deposits with access to up to $2 million of FDIC insurance because of this cooperative partnership that they established with some other banks. Recently, as of May 5th of 2023, the CEO of SoFi, Antonin Nato, bought 30,000 shares of stock and that's a great show of confidence from the CEO. What are my strategies in light of all these? First of all, I bought and sold SoFi shares since April of 2023 and have made a small profit and I bought SoFi shares again right after the March CPI numbers were released on April 12th, 2023. I might buy more shares if the price continues to recover and I'll notify my Twitter subscribers if I do so. At this point, I'd like to remind you to subscribe to my Twitter account which is DanMarketL in addition to subscribing to my YouTube channel and if you like what you've seen so far, I'd like to suggest that you click the like, subscribe and notification button. Also, as usual, I very much welcome your comments, questions and suggestions.