Published - Mar 24, 2022 @ 4:16 PM (EET)
SoFi Technologies, Inc. (NASDAQ:SOFI) announced Tuesday that members will now be able to invest part of every direct deposit into cryptocurrency with zero fees.
The new feature builds on the digital personal finance company's robust offerings for Checking and Savings accounts, which already includes zero account and overdraft fees, an industry-leading 1% annual percentage yield, and up to two-day early paycheck.
Following the news, shares of the company rose 1.6% and gained slightly to close at $9.69 in the extended session.
"Crypto investing is rising rapidly. In the last year alone, SoFi doubled the number of investors setting up automatic, recurring crypto purchases." - CEO Anthony Noto of SoFi.
SoFi launched this feature so that members can automate their cryptocurrency purchases with each paycheck for no purchase fee, either investing by dollar amount or percentage of their deposit into one of 30 coins.
The product is SoFi's latest expansion of offerings to make getting started with cryptocurrency investing simpler. The SoFi Credit Card feature to redeem points directly into currency was created to allow SoFi members to invest when and how they want, all in the same app.
SOFI STOCK RISK FACTORS
According to investment research platform Business Quant, the biggest overhang surrounding SoFI's growth prospects is the federal student loan moratorium that was introduced in 2020, as students no longer have an immediate need to refinance their loans with the lender.
Seeing that SoFi's student loans business accounted for 63% of its total loan originations in the first quarter of 2020, the moratorium has clearly been hampering SoFi's loan origination growth in recent quarters.
In addition, Morgan Stanley analyst Betsy Graseck recently downgraded the stock from Buy to Hold with a price target of $10 since another extension of the federal student loan moratorium can hurt the company's margins, according to Graseck.
Though SoFi has grown at a rapid pace in the past and its banking charter is expected to boost its EBITDA, it's important to note that SoFi is still unprofitable on a GAAP basis.
With significantly reduced revenue and contribution profit potential from the student loan business, the company may have to raise more debt or dilute its shareholders in order to fund operations.
SoFi shares are down 40% year-to-date.
