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Ep 41. [ENGLISH] SOFI (Ticker: SOFI) #SOFI #SOFIstock - YouTube
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after announcing fantastic q3 earnings
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results on november 10th sophie's stock
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soared the next day the stock price
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remained in the same price levels for
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the next few days but then it fell again
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on november 16th after sophie announced
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on november 15th that significant
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investors of sofi were selling their
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shares
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as of today on november 22nd sofi stock
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is down another 8 on use of another
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inside sale
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today we'll catch up on the news that
[30]
made the stock price fall and other news
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updates about sofi
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we'll also follow up on analyst
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consensus and any re-ratings that
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occurred in the last week since the q3
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earnings report
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sofi stock fell almost 12
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after sofi announced on november 15th of
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a secondary offering of significant
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investors of sofi selling their common
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stock
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the secondary offering happens when
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significant shareholders want to sell
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their shares and use the cash to invest
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somewhere else the shares that are sold
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will not change sofi's total number of
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shares outstanding but it could increase
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free floating shares which is actually a
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good thing for common investors since it
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provides a little more liquidity in
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terms of buying and selling shares
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from this secondary offering sofi also
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does not receive any money from the sale
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of the shares because these shares are
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bought by other investors
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according to sofi's news release these
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shares will be sold from time to time in
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one or more transactions on nasdaq
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in the over-the-counter market
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through negotiated transactions
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at market prices at the time or
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negotiated prices
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the shareholders who are selling the 50
[104]
million shares include softbank silver
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lake partners qatar investments
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authority redcrow capital and
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cha-cha-cha's back five
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they're selling 50 million shares of
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sofa which is about 6.9 percent of
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sofa's outstanding shares but it's
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important to understand that even though
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6.9 of shares are being sold by
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significant early investors these
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investors will still hold a large
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position of sofi
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according to sofi secondary offering
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prospectus
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altogether the shareholders owned 39.8
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of sofi before the secondary offering
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and after the secondary offering the
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position will drop to 32.9
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which is still a large stake in sofi
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none of these shareholders are getting
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rid of all of their sofa stock
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for example softbank is selling 22.5
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million of the 50 million shares in the
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secondary offering
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but this is only 19.1 percent of their
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prior position
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of
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117
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795 million shares
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this means they'll still have 11.8
[177]
percent of the company's shares after
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the sale
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and after the sale silver lake partners
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will go from 4.9 percent to 3.9 stake of
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sofi
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on november 22nd the stock fell another
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8 at the time of the creation of this
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video after news of a significant
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insider sale executed on november 18th
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the insider is thomas clayton wilkes
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director and vice chairman of galileo
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who sold roughly 10 million shares of
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sofi worth about
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217.65 million dollars
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on november 18th
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wilkes still maintains a significant
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position in sofi wilkes sold
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approximately 19 of his shares of sofi
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and based on 799 million shares
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outstanding according to the sec form 4
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filing of insider trading wilkes owns
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42.6 million shares after the sale
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this indicates that wilkes's stake in
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sofi before the sale was 6.6
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and after the sale wilkes still owns 5.3
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of sofi
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also on november 18th billionaire
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investor and original spac sponsor of
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sofi chamath palahapatea announced that
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he decided to sell 15 of his portfolio's
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stake in sofi shares
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he said in his statement and i quote
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there are still areas of the market that
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are ripe for opportunity
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amazing things are happening in climate
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science life sciences and alternative
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finance
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and it's clear that the world needs
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these solutions now more than ever so
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what do i do
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sell down
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invest more
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re-allocate risk from public to private
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markets
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to that end i decided to sell about 15
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percent of our stake in sofa
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to build up some cash reserves and fund
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several new investments in mitra chem
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next-gen battery production in the u.s
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spectral fico score for web3
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and syndica aws for web3
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we also expect to increase our public
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investment in cloverhealth through their
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primary offering we remain a significant
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investor in sofi retaining about 85
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of our original stake and are excited
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about their path ahead the secondary
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offering to sell shares by the original
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investors could also be due to similar
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reasons as chamath palahapatiya
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explained
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all these investors still hold a
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significant position in sofi
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the reason they're selling could be
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because they have seen a big profit up
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until now and they want to reinvest some
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of these funds into other opportunities
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but they are not selling all their
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shares because as chamath pala hapatia
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also said they're most likely still
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excited about sofi's path ahead with the
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bank charter and becoming a common
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household name as a one-stop shop for
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managing finances and banking needs
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on november 4th sophie announced
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redemption of all outstanding warrants
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and as we explained in our episode 34
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video on sofi we will see slight
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dilution from the redemption
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on november 19th sophie announced that
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the redemption fair market value of the
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warrants is
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22.38 cents
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as a result holders who exercise their
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warrants on a cashless basis will be
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entitled to receive
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0.361 shares of common stock per warrant
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any warrants that remain unexercised
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following december 6 2021 will be void
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and no longer exercisable
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so we should see all of the warrants
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fully diluted by december 6th and no
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longer impact the shares outstanding
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after that day
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a week after the q3 earnings report the
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analyst consensus target price still
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remains at above current price levels
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from 7 institutional analysts the
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average target price is
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25.71
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as of november 22nd 2021.
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does that mean the current dip is a buy
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opportunity
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many investors were regretful that they
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didn't buy the sofi stock just before
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they announced their q3 earnings report
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because we saw a huge surge in their
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stock price due to their great results
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however after the announcement of the
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original investors selling their stake
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in sofi sofi's price level is back down
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to its levels in the low 20s before the
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rally in november
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objectively the company's performance
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portfolio of products and solutions and
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member growth is still the same now
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compared to a week ago when they
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announced their q3 results
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and as explained earlier the sale of
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shares by the original shareholders does
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not represent all of their holdings
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to add to that sofi's popularity has
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been growing as can be seen in the app
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downloads
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as of this week sofi is number seven in
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downloads under the finance category in
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the apple app store
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the fact that sofi is in the top 10
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downloads is a great sign
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especially before it has even become a
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bank
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sofi is ranked 31 in google play's
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finance downloads
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as we explained in our fintech industry
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episode
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the consumer trend in digital banking is
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to use one bank for all their needs
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including saving investing mortgage
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lending and more
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so we will have to continue to monitor
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sofi's popularity and familiarity among
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users
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to reiterate we have not seen any
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negative news on the company's products
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or their management or on their
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performance
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so fundamentally our thoughts on sofi's
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growth forecast in the next year should
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not change
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the secondary offering could indicate
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many reasons but similar to chamath
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hapatia's reason for selling the
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original investors could be selling in
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order to free up their funds to
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reallocate their portfolio
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also the slight dilution from the
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warrants redemption should all be
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complete by december 6th
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we have also not seen any downgrades or
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re-ratings by analysts in the week after
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the q3 earnings results and the average
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analyst consensus target price remains
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in the 25 to 26 dollar range
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with these new updates this past week
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the dip could be seen as an opportunity
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for many investors but this is not
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financial or stock advice it is merely
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our interpretation of what happened in
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the last week so you should do your own
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research before making any decisions
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investors are still eagerly waiting for
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the bank charter and continued growth
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into 2022
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but as we outlined in episode 31 about
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sofi's key risks the bank charter not
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being approved is still a huge risk
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but sofa ceo anthony noto said in the q3
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earnings call on november 10th
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that they are still looking forward to
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finishing the last mile which means they
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have not gotten any indication from the
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authorities about a possible rejection
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but we'll still have to see
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thank you for watching
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