SoFi Technologies Inc.’s (NASDAQ: SOFI), shares surged by 10% after the company announced that it had signed a $2 billion personal loan deal with Fortress Investment Group LLC.
According to CEO Anthony Noto, the San Francisco-based fintech company expects this partnership will enhance its loan platform. It is a key component of its strategy to shift to less capital-intensive fee-based revenue streams.
SoFi’s stock reached a new high for the year on Monday, following the news.
Why Fortress partnered up with SoFi
SoFi’s loan platform has been in high demand, so the partnership with Fortress was a logical move. CEO Noto praised Fortress’s seamless execution and recognition for the platform’s worth.
Dominick Ruggiero of Fortress Investment Group expressed confidence in SoFi’s innovative approach and its credit solutions. He called the deal an attractive investment opportunity.
SoFi’s stock has been rising over the last three months. This is due to better-than-expected earnings in the second quarter.
The company reported an increase in revenue of 21% over the previous year, reaching $587 millions.
But despite its growth, SoFi is not attractive to income-focused investors as it does not pay a dividend.
Is it too Late to Invest in SoFi?
Jim Cramer believes there is still room for growth, as SoFi’s shares have risen by more than 50% since the end of July. The US Federal Reserve is expected to further lower interest rates, so some believe that there’s plenty of room for growth.
Cramer, host of Mad Money views SoFi as “incredibly well-run,” emphasizing the fact that it is much more than a student loan provider.
Cramer added SoFi to his list of top picks in September.
Wall Street analysts, however, are more cautious. The stock has a consensus rating of “hold”, with an average price goal of $8.14, indicating a possible 20% downside.
Crispus Nyaga, a market expert, remains bullish about SoFi. He believes that the company’s innovative approach and potential for growth makes it worth watching in spite of the market’s mixed opinions.
This post SoFi shares rise 10% on $2 billion Fortress Personal Loan Deal may be modified as new developments unfold
This site is for entertainment only. Click here to read more
