The ceo of social capital is definitely one of the greatest investors of our age. Over the past decade he has made numerous successful investments, including early investments into amazon, tesla, slack, facebook and bitcoin. Most recently, he has stated that he believes he has found the next stock that has potential to 10x within five years. In fact, he even stated that this company will become the next amazon and tesla of its space.

In addition to chamath another famous investor ron, barron also invested in this stock. Some of you may know ron baron as an early investor in tesla. However, he has also successfully invested into many other companies, while managing his fund bearing partners. In the past 25 years.

Ron has averaged a return of 13 per year and that's not including 2020, where he returned over 100 in his flagship fund. In this video, i will cover what this company is and whether the stock is a buy today welcome to caskians academy, if you're new to the channel, please consider subscribing for more content like this and let's get right into it before we start. I just wanted to thank all of you for getting the channel to 100 000 subscribers as a celebration, i recently opened up a free discord server for all of us to talk about stocks evs and more. The server has many advanced features such as a stock bot that has hundreds of commands.

The link will be in the description below and in a pinned comment just to be clear. It's totally free to join, so i look forward to seeing you there now. You guys know that i won't wait until the end of the video to tell you the stock. I'm talking about the stock that chamath and ron believe has plenty of upside over.

The long term is sofi, which stands for social finance. Sofi is a technology company that is disrupting the massive industry of banking and is merging via spac. Under the ticker symbol, ipoe sofi looks it has dropped many parts of the financial services industry and the company claims of a two trillion dollar market cap opportunity to be disrupting such a large industry is not something to overlook. This video will focus on what sofi offers and why chamath and ron both believe that soviet has a lot of potential as a long-term investment.

First, we'll start off with an overview of what sofi is and how it is disrupting banking. Then we will cover sofi's growth. Loop and its path to 10x, after that sofi, ceo and his leadership and lastly, sofi's valuation and whether it is a buy today with that being said, let's get right into it. In 2011, sofia was founded by four stanford university graduates, who had a vision of disrupting the student loan industry.

Today, in 2021, the companies expanded rapidly into many industries and has become one of the leaders in the digital banking revolution. This is highlighted with investors like kathy wood from arkhanvest, who sees big banks getting their market share taken from them very soon, as many of us know already squares cash, app, paypal's, venmo and bitcoin allow users to send their money without having to go to the bank. This convenience brings the concept of low advertising costs because their services can travel easily through word of mouth rather than traditional advertising. In turn, this enables the services to allocate less money to advertising spending and instead focus on providing a better and cheaper service.

What sofite does is they take this mindset of an online financial world and bring it to the banking space? Kashup and venmo are great for the democratization of money, but at the end of the day, they still can't replace normal checking and savings accounts. This is where sofi comes into play. Sofi is a neo bank, which means that the company doesn't have to pay for the large infrastructure and maintenance costs that banks have to constantly pay for. One of the major advantages of sofi is that the company doesn't have to set up physical bank branches.

Setting up physical bank branches costs a lot of money because you need to be located conveniently and located everywhere in order for people to feel comfortable using your services. This doesn't even include the atms bank tellers and security infrastructure. Sofi doesn't have any of this, which brings back the idea of being able to focus on providing a better service. The company plans to cover literally everything that is offered in the banking world and will become a one-stop shop for all of your financial needs.

So if i put this product into five, different categories borrow: invest, spend protect and for business with borrowing. Consumers are able to get access to multiple types of loans, including student, personal and home loans. These aren't issued or refinanced by them, but rather through a third party that specializes in such work for sofi invest. Users are able to trade stocks etfs and crypto directly on their platform.

However, something that caught my eye in this category was that they have even more available options. Users can employ a sofi robo advisor to manage their ira accounts. Additionally, sofi has their own unique etfs that are only available on their platform. Currently, the company has five different sofi etfs sofi has tgif, which focuses on high income, yielding securities and gives investors a weekly dividend every friday.

Another one is gige which focuses on high growth tech companies. Since its inception on may, 8th 2019 gige has returned over 83 percent. Sfy follows the s: p 500, with the 500 largest publicly traded, u.s companies and sfyx invests in the top 500 mid cap companies. More interesting, however, is sfyf, which is a fund that invests in the top 50 companies held by users and sofi invest.

This is certainly an interesting concept by tracking the top 50 most held stocks. This fund will be able to follow the herd of the stock market. Personally, i wouldn't invest into that, but let me know what you think: sofi offers a branded credit or debit card that is various forms of cashback credit, score monitoring and money tracking. The sofi credit card gives a two percent cashback for money spent on its other services and one percent cashback on all items for the protect portion sofa allows you to purchase insurance policies offered by third parties.

This includes homeowner and rent insurance provided by lemonade insurance and auto insurance provided by roots for the business portion. Sofi brings various forms of financial literacy that will provide valuable advice for people not experienced in finances like college students. Additionally, sofi also offers small business financing, including ppp loans, sba loans, term loans and personal loans. Essentially, we can see that so far's management wants to integrate every financial service on their platform, so users won't need to use any other platforms.

Chamath describes this as a one-stop-shop solution. Have you been targeting fintech for a while? How did this come together? Yeah, you know. A lot of the things that i do is try to look it back at some of the best investments we've made like amazon and tesla and try to find patterns, and in this, what i was trying to do was map those patterns into financial services. Just because we're at a point in time where it's clear, that the banking infrastructure really isn't meeting the needs of u.s consumers.

And so what i did was just kind of systematically try to figure out what was broken in banking and then try to figure out which company was best representative of the solution that people wanted, which i can basically tell you, is three things. People want low to. No fees, they want fair and transparent lending and they want a full suite of products so that you can basically have a one-stop shop and so far, basically was the top of the list. When i, when i looked across all the companies on those dimensions, we went over what sofi is, but what actually differentiates so far from others is a different story.

Sofi sees his competitive advantage being its fast services, broad selection of services, content and convenience. What sofi recently added in this list is its social network here on youtube. We can all discuss with each other. Our thoughts about investing sofi looks to enter this space through its recently added social investing features.

These features include the ability to see what other sofi members are investing in, see new investment ideas and see how users perform in comparison with others. There is some potential in disrupting the investment social network. Nevertheless, the most special part about sofi is its growth. Loop sofi describes its growth loop as a financial services productivity loop.

Essentially how this works is that sofi builds trust with the customer on one product which drives that customer to use sofa's other services. By doing this, sofa can lower its customer acquisition costs. The reason why that is important is because sofa can spend more money in marketing than its competitors, since the cost to acquire a customer is lower, as we've seen with other online companies, the winner of their respective sector, easily takes the most market share similar to other Companies like amazon, spotify, facebook, airbnb and many more sofi's lead in the fintech space will allow to take the majority of the market share. According to sofi's research.

Eighty percent of consumers use multiple banks, because none of the banks are adequate. One-Stop shops sofi looks to change this as the company's the only company with all of the banking services in one app because of its unique approach. Sofa is quickly becoming a dominant player in the fintech industry. In fact, in 2021 sofi expects its members to exceed 3 million users, which is a growth weight of 75 year over year.

As i talked about earlier, the fact that so far has multiple products means that its revenue growth can accelerate from customers using all of sofi's products in 2021. Sofi is expected to have its multi-products members increased 95 year-over-year. This multi-product usage leads to a greater lifetime value for each customer, which directly translates to more profits for sofi. In fact, 24 percent of sofa's product sales comes from existing members trying sofa's other services in the third quarter of 2020.

Over 65 of home loans came from existing members. The existing members that tried the home loan service were acquired through only one million dollars of marketing and drove 30 million dollars in revenue. Sofi also recently acquired a payment services company named galileo for 1.2 billion dollars. Galileo allows companies to easily create bank accounts and issue physical and virtual credit cards.

One company that you might be familiar with that uses galileo is robin hood. Sofi looks to use its existing products to merge them with galileo and become the provider of bank accounts loans. Stocks and virtual credit cards to all the fintech companies. This is similar to amazon web services, as aws provides a platform for many websites you use today, which brings in huge amounts of profits.

Additionally, galileo itself has been accelerating in growth in the third quarter of 2020. Galileo had its total account number at 50 million accounts due to the rise of online payments in 2020 because of its multi-products moat sofi is expected to have its remedy go extremely fast from 2020 to 2025. by 2025. Sofi expects to have its revenue at 3.6 billion dollars.

Additionally, sofi also expects to have its ebitda or earnings before tax and depreciation at 1.1 billion dollars by 2025.. All of sofi's products are in different maturity stages, as this lending program is already profitable. At a 58 margin and its technology platform, galileo has a 625 margin. On the other hand, sofa's financial services platform is expected to grow extremely fast from 2020 to 2025 and is on its way to profitability.

Usually fintech startups have to pay others to insure their money because those fintech startups aren't actual banks insured by the federal government. So if i recently got its preliminary approval to become an actual bank, which means that sofa doesn't have to pay other banks to insure its money, as you can see in this graph, sofa becoming an actual bank will improve margin significantly by lowering its cost of capital. This will accelerate profitability for sofi and save extra money for marketing expenses. Now that we can clearly see sofa's branding and pricing power, let's take a look at sofi's leadership to analyze whether sofi ceo is an elon musk, jeff, bezos or jack dorsey type of person.

One of the most important factors when examining a business and whether it is a potential investment is when you look at the leadership of the company without elon, musk and jeff, bezos tesla and amazon would be nowhere near where they are today. The ceo of sofa is anthony nodo, who is formerly in big leadership positions in the nfl and twitter. After talking with anthony chamath has come to the conclusion that anthony is someone who can drive the growth of sofi. Look, i think, you're, seeing even through the events of the last 24 hours, leadership and character really matter, because you are faced with incredibly difficult decisions of policy of morality, um, all kinds of things.

Here's what i can tell you just personally about anthony um. He has lived an incredibly hard life to get to where he has, and i have tremendous empathy for that, because i've lived a similar path, and so i just have deep respect for the man that he is and the character that he has. But then you know practically speaking in his career: he is just completely money. In the bank i mean the former cfo of the nfl, the former cfo of twitter, the former ceo of twitter, an incredible banker, a great research analyst and just a wonderful human being.

So this is sort of a what you see is what you get kind of guy. Who really believes in you know advancing financial services, for you know middle america for normal folks to be able to sort of get ahead, and i just think that that's a person you want to see win and then, as a result, the company that he's built. It's just really special. We must take a deep look into its valuation and whether the stock is a buy today, as i mentioned earlier, sofi will be merging with chamath palihapatiya's spac, which is under the tigger symbol ipoe at ten dollars.

A share sofa is valid at 8.7 billion dollars at the time i'm recording this video ipoe is valued at 19 a share, so this would be a market cap of roughly 16.5 billion dollars in order to see whether sofi is undervalued or overvalued. We're going to use four metrics, which are the 2024 and 2025 expected pde ratio in the 2020 and 2021 price to sales ratio in 2020. Zofi expects to lose 220 million dollars and have a revenue of 621 million dollars. This would value sofi at a price of sales ratio of 26.

This is quite high, but, given that margins are expected to increase substantially once consumers try sofa's multi-products offering it isn't accurate to compare this company to a company like square, which is the price of sales ratio of 14.. So far, price of sales ratio in 2021 is 16, which is much closer to square's current price to sales ratio. Sofa's 2024 pde ratio, which is essentially what the pde ratio in 2024 would be if sofa's share price stayed. The same is 41, which is actually quite low for a growth company.

Sofa's 2025 pde ratio is 26, but keep in mind that these pde ratios are deflated because they are based off of sofa's numbers before getting a bank charter which the company has already gotten preliminary approval to now i don't complicate these numbers so i'll. Add in that sofa's 2025 price to sales ratio is 4.5 if sofa is valued at a price of sales ratio of 15 in 2025. This would mean that in a 5-year span, sofa has a clear path to 3x from its current valuations by my calculations. Now this shouldn't be taken as financial advice, but so far to me looks like an enticing long-term investment.

If you're wondering when to hypothetically buy in, i would say that the best strategy is the dollar cost average. But again always do your own research. So there you have it chamath, palihapati's brand new spac, sofa chamat's world view is to democratize aspects of society that are not well versed in the everyday person. With this, he invests in technological, easy to access and easy to understand, platforms that he believes are leaders in this digital revolution.

We can certainly see this with sofi in the banking sector, but also with some of his other spaces, such as open door and real estate and clover health in the healthcare sector. With such a mindset there's a lot of risk because this hasn't been done before, but there is room for massive potential like we saw with smartphones streaming and the upcoming eevee revolution. Banks will either have to adapt to the changing society or die off. What are your thoughts on sofi and do you think it is an enticing investment if you're interested in seeing my full portfolio with explanations for each position or buy and sell alerts check out my patreon in the description below? If you enjoyed this video, please hit the like button and subscribe and i'll see you in the next one.