SoFi (SOFI) shares gained as much as 10% in early trading Tuesday after the fintech firm said users on its platform will now have access to new private market funds from Cashmere, Fundrise, and Liberty Street Advisors.
Teaming up with those asset managers will enable SOFI members to gain exposure to high-growth private businesses, including SpaceX, OpenAI, and Epic Games.
Including today’s surge, SoFi stock is up roughly 130% versus its year-to-date low set in early April.
Why Is Private Market Push a Positive for SoFi Stock?
SoFi’s push into private markets marks a strategic leap toward platform differentiation and investor appeal.
Historically, private markets, especially ones featuring high-growth picks like SpaceX and OpenAI, have been gated to institutional investors and ultra-high-net-worth individuals only.
By democratizing access for its user base, SOFI is not only improving customer value, but elevating its brand beyond digital banking and into a comprehensive, tech-savvy financial hub as well.
It’s reasonable to assume that teaming up with three renowned investment firms to venture into alternative investing will serve as a catalyst for user growth, stickiness, and revenue diversification – all of which could translate to an increase in the SOFI share price over time.
SOFI Shares Are Trading at a Premium Valuation
SoFi shares sure look attractive as a long-term investment, given the Nasdaq-listed firm has already disclosed plans of resuming its crypto offerings later this year.
However, investors should note that the fintech stock is expensive at current levels on almost all valuation metrics. At the time of writing, it’s going for a forward price-earnings ratio of about 68x – more than four times the multiple on best-of-breed conventional banks like JPMorgan (JPM).
Meanwhile, SOFI stock doesn’t pay dividend to appear more attractive despite valuation concerns either. That’s partly why KBW analysts reiterated their “Sell” rating on the neobank in the final week of June.
Wall Street Recommends Selling SoFi at Current Levels
While not nearly as bearish as KBW, other Wall Street analysts recommend pulling out of SOFI shares at current levels as well.
The consensus rating on SoFi Technologies currently sits at “Hold” only with the mean target of about $14 indicating potential downside of some 30% from here.
