Even if you’re afraid to invest in banks, this is a great time to consider SoFi Technologies (NASDAQ:SOFI) stock. First of all, it’s wrong to lump SoFi Technologies into the same category as 2023’s failures in the financial sector. Plus, SoFi is branching out into a lending niche that could generate substantial revenue.
To a certain extent, the market’s fears about bank stock investing is understandable. After all, commentators are still buzzing about the collapses of SVB Financial Group (OTCMKTS:SIVBQ) subsidiary Silicon Valley Bank and Signature Bank (OTCMKTS:SBNY).
On the other hand, SoFi Technologies is diversifying its business model and distancing itself from less secure banks. Thus, you now have an opportunity to take a share position in SoFi Technologies while investors are fearful and the price is low.
What’s Happening With SOFI Stock?
Without a doubt, fears of banking-crisis contagion put negative pressure on SOFI stock in the month of March. Now, you may still have a chance to buy SoFi Technologies shares at less than $7 apiece, with a target of $22, as that’s the resistance level from 2021.
Or, you can be more cautious and just aim for a 2x move, which really isn’t asking for too much. Bear in mind, SoFi Technologies isn’t a bank that over-leveraged itself on government bonds or cryptocurrency. Furthermore, SoFi made it crystal-clear that it held no assets with Silicon Valley Bank.
Besides, unlike some other banks, SoFi Technologies has a surprisingly diversified business model that involves app-based saving and investing, financial planning, credit cards, loans and more. And speaking of loans, SoFi just diversified even further by acquiring a mortgage lender, Wyndham Capital Mortgage.
Reportedly, the buyout is finalized and SoFi Technologies now has access to Wyndham’s “intelligent and scalable platform that has set the industry standard for a fully digital mortgage experience.” This could prove to be a huge revenue source for SoFi, especially as the company could cater to young first-time home buyers.
SoFi Technologies Offers Added Protection for Depositors
SoFi Technologies’ foray into mortgage lending could propel SOFI stock toward a 2x move. Yet, some fearful folks might still be convinced that SoFi is just like Silicon Valley Bank and Signature Bank.
Here’s more evidence that SoFi Technologies isn’t the same as the banks that imploded in March. SoFi now offers up to $2 million worth of Federal Deposit Insurance Corporation (FDIC) insurance per customer account. That’s much higher than the industry standard, which is $250,000 of FDIC deposit protection per account.
This move should reassure large-scale depositors, but don’t ignore the larger implications. Ultimately, SoFi Technologies is distancing itself from failed banks that had too many uninsured deposits on their balance sheets.
In other words, as SoFi Technologies CEO Anthony Noto put it, the company is “making sure our members have peace of mind about their money.” If millennials and Zoomers trust SoFi with their capital, they could become lifelong customers and, therefore, enduring revenue sources.
Get Ready for SOFI Stock to Double
SoFi Technologies is making a smart move in diversifying its business model. Moreover, SoFi is demonstrating prudence and trustworthiness by offering extended FDIC deposit insurance.
The point is, SoFi Technologies isn’t the same as Silicon Valley Bank and Signature Bank — not even close. So, there’s no need to generalize about U.S. banks. SoFi Technologies has an opportunity to grow its business quickly and securely in 2023. At the same time, you have a chance to make a brilliant move and buy SOFI stock before the price doubles or more.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.