Recent discussion surrounding SoFi Technologies has centered around the potential impact of the resumption of student loan repayments on demand for refinancings. However, the fintech company is now making headlines for another significant achievement that analysts are optimistic about.
According to the Financial Times, SoFi (ticker: SOFI) is helping underwrite its first mainstream initial public offering (IPO) for the popular grocery-delivery company Instacart. Two insiders familiar with the deal revealed that SoFi intends to offer shares to users of its retail investment app.
At the time of writing, SoFi has not provided an official comment on the matter.
Eugene Simuni, the managing director of Moffett Nathanson, explained that SoFi’s involvement in the underwriting process aims to provide its users with direct access to the IPO. He described this development as “very positive.”
Simuni further expressed his perspective on SoFi’s strategy, stating that the company aims to create a comprehensive digital financial services platform that rivals even large traditional banks like JPMorgan Chase (JPM). He emphasized that digital investing services are a vital component of this platform but challenging to develop.
SoFi’s foray into IPO underwriting not only showcases its expanding capabilities but also solidifies its position as a formidable competitor in the fintech industry.
SoFi Expands Offerings with Instacart Deal
SoFi, a leading digital banking platform, is making significant strides in expanding its services. The recent Instacart deal is a testament to this progress. While the immediate financial impact may be modest, with investment services currently accounting for only about 1% of SoFi’s revenue, the breadth of its offering sets it apart from competitors in the digital banking industry.
According to Mizuho managing director Dan Dolev, who rates SoFi shares as a Buy, having a diverse range of products and services demonstrates the company’s ability to generate revenue from various avenues. Additionally, these offerings have the potential to create a flywheel effect for SoFi, making it more appealing and sticky for its customers.
SoFi has been actively pursuing its plans to enter the IPO business since March 2021. As reported by the Financial Times, the company has already acted as an underwriter for five deals, all of which involved special-purpose acquisition companies (SPACs).
Despite a slight dip of 0.4% to $8.76 in late morning trading, SoFi’s stock has experienced remarkable growth this year, soaring by 90%.