Chamath Palihapitiya, CEO of Social Capital (NASDAQ:IPOE), has announced that SoFi will go public via a SPAC deal that is worth $8.65 billion via CNBC
According to a Tweet by Palihapitiya, his thesis is based on the challenges of incumbent banks and the benefits of Fintech and digital banking.
Palihapitiya says that SoFi has built a best in class digital banking solution. SoFi reports 1.8 million predicted to top 3 million users in 2021. The company was launched as a student loan refinancing platform but, over time, has iterated and expanded into other verticals and markets. Today, SoFi is more of a digital bank and investing platform with a dedicated community than an online lender. It was reported in mid-2020, that SoFi has filed for a national banking charter.
Anthony Noto said that he and Palihapitiya are super aligned with the goals of SoFi.
“Setting really high, loft goals,” said Noto. “We can really do a much better job of explaining the opportunity together.”
Noto predicted SoFi would do a lot of things together strategically with Social Capital. He added that they spent 2020 preparing for this event.
And why a SPAC versus an IPO? Noto says a SPAC will allow them to better educate investors – a process that is superior to a traditional IPO.
Additionally, deal certainty is a feature of a SPAC that Noto said drove their decision. He pointed to S-1s filed by firms that, in the end, do not get done.
In 2020, SoFi’s revenue was said to be at $621 million. In 2025, SoFi anticipates revenue of $3.67 billion.
SoFi expects to hit profitability in 2021 delivering $27 million to the bottom line. In 2025, net income is predicted to rise to $1.17 billion.
SoFi has built the AWS of Fintech said Palihapitiya. He also pointed to the fact that SoFi not only serves consumers but is also in the enterprise space providing services to Fintechs like Chime.
This is an incredible company in banking and fintech that has the potential for a winner-take-most outcome.
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— Chamath Palihapitiya (@chamath) January 7, 2021