Podcast Summary: Chit Chat Stocks – Are We Buying SoFi?

Date: September 3, 2025
Hosts: Ryan Henderson & Brett Schafer

Episode Overview

In this episode, Ryan and Brett conduct an in-depth research discussion on SoFi Technologies, examining its business model, growth trajectory, competitive advantages, financials, and valuation. Listeners are taken through SoFi’s evolution from a peer-to-peer lender to one of the fastest-growing neobanks in the United States. The hosts analyze core drivers behind user and deposit growth, dissect key risk factors, and conclude with their current investment stance on the company.

Key Discussion Points & Insights

1. SoFi’s Background & Transformation

[02:09]

• Origins: SoFi started in 2011 as a peer-to-peer lending network focused on student loan refinancing, initially funded by Stanford alumni ($2 million pilot program).

• Rapid Funding & Growth: Raised $77 million in Series A within a year – atypically large for an early-stage company.

• Early Challenges: Faced negative attention for misleading marketing and internal scandals (CEO ousted for harassment, [04:19]).

• Key Turning Point: Anthony Noto (ex-COO Twitter, ex-CFO NFL & Goldman Sachs) took over as CEO in 2018, bringing professionalism and stability.

• Going Public and Bank Charter: Went public via SPAC in 2021, timed with the market bubble. Acquired Golden Pacific Bank in 2022, allowing SoFi to obtain a bank charter and rapidly grow deposits from $1B to $29B in about three years ([04:19]).

  "Since Noto has come in, we can see the growth but… it feels like he’s brought in sort of a sense of professionalism for SoFi." – Ryan Henderson [05:50]

2. Membership & Deposit Growth – How Did We Get Here?

[13:27]

• Member Numbers: Rapid growth from 1.2M (2020) to 11.7M (2025). Members include anyone with any engagement—actual bank customers, loan borrowers, or just credit score monitoring signups.

• Primary Bank Distinction: Not all "members" treat SoFi as their primary bank. Significance lies more in deposit growth than top-line member growth.

• Net Additions: Qtrly new members hit records: Q3’24 (598k), Q4’24 (755k), Q1’25 (788k), Q2’25 (830k). Nearly 3M net new members last year—a number comparable to all of Ally Bank.

  "Even if just 10% of those customers are using SoFi as their primary banking app, that is still really, really solid growth..." – Ryan Henderson [14:51]

• Deposit Growth: SoFi's balances grew from $1B to nearly $30B in just over three years, largely due to yield-seeking customers drawn by higher APYs.

3. Key Competitive Advantages

[16:40]

a. Counter-Positioning (Cost & Tech)

• No Branches: Purely digital, SoFi saves on operating costs, passes those savings to customers through high APY (currently ~3.8-4.5% for Plus members; Chase offers 0.01% [16:40]).

• Tech Edge: Built natively on the cloud, allowing quicker rollout of products and features vs. legacy banks with outdated infrastructure.

  "Most legacy banks have so much technical debt… a company like SoFi, built a decade ago natively on the cloud, can ship products… much faster." – Ryan Henderson [21:33]

b. Aggressive, Credible Marketing

• Large Budget: Uses proceeds from SPAC to double marketing budget (now ~$1B/year, almost double what Chime spends).

• SoFi Stadium Naming Rights: $30M/year for 20 years provides prestige and persistent brand exposure (NFL games, Super Bowl, Olympics).

  "If there’s any company that’s going to do a stadium sponsorship, I think consumer fintech app makes a lot of sense." – Ryan Henderson [23:35]

• Brand Trust: Among neobanks, SoFi stands out as a name customers recognize and trust for large deposits.

c. Competitive Across All Product Lines

• Breadth & Competitiveness: Unlike most banks that only lead on one or two products, SoFi ranks highly in savings rates, student loan refinancing, personal loans, credit cards (2% cash back, no annual fee), and even stock brokerage services.

• Full-Stack Banking: SoFi performs well across categories, attracting diverse financial relationships from customers.

  "They’re in this perfect sort of sweet spot for growth where they are not only the innovator… but they’re also big enough that they have credibility in the eyes of the consumer." – Ryan Henderson [31:09]

4. Lending Business & Accounting Nuances

[36:01]

• Loan Origination & Monetization: Offers personal loans (majority), student, and home loans. Three ways to make money: hold (collect interest); whole loan sale (sell to institutions); or securitize (bundle & sell).

• Revenue Makeup: Lending (personal loans) = ~2/3 of loan portfolio, >80% of new originations, and 85-90% of company revenue.

• Accounting Complexity: Uses fair value accounting for all loans (even held for investment), meaning loans' market value is updated more frequently on their books. Rise in delinquencies or rates would impact SoFi’s earnings more rapidly than traditional banks ([39:34]).

  "Anytime you hold a long duration asset... a rise in delinquencies or a spike in interest rates is bad news. However, with fair value accounting, that is reflected in earnings sooner." – Ryan Henderson [44:02]

• Loan Performance: Net charge-off rate at 4.5% (has decreased); average coupon is 13%. Loans are 2-7 years (shorter-term than mortgages).

• Underwriting: SoFi uses FICO, debt-to-income, and has a decade-long operating history through various cycles.

  "From what I can tell, they follow very standard underwriting procedures. They use the FICO score, they use debt to income ratios, employment history, education history... so it's... pretty good history of underwriting here." – Ryan Henderson [49:34]

5. Valuation & Investment Decision

[51:04]

• Valuation Difficulty: Mainly dependent on net interest margins (NIM), which are impossible to predict beyond 2-3 years out. Ryan uses scenarios assuming 20% annual deposit growth (2025-2030) and NIM range between 5% and 6%.

• Model Outcomes: At 5.8% NIM, rough math suggests SoFi would generate ~$2B in 2030 earnings, equating to a ~13x forward P/E at the current $29B market cap.

  "It feels fine to me, but it's not screaming attractive like it's..." – Ryan Henderson [54:28]

• Key Issue: At ~4x book value, SoFi is pricing in a lot of growth. Ryan wants a lower forward multiple for a large position and would prefer a 30% price drop before making SoFi a core holding.

• Comparison to Peers: The discussion includes comparison to Ally Financial and other neobanks; SoFi is seen as better positioned but the sector is highly competitive.

  “I might be willing to take a starter position, because I do like SoFi and I like where they're at… But unless this drops by probably 30% or more, I'm going to be holding off on making this a big position.” – Ryan Henderson [55:54]

Notable Quotes & Memorable Moments

• On Branding and Stadium Sponsorship:

  "When you see a company sponsor a stadium, SoFi Stadium, you think oh okay, they must be a big credible company if they, they can spend that much money." — Ryan Henderson [23:53]

• On Consumer Inertia in Banking:

  "There is lethargy… of people staying with their existing financial services app… and it's going to take a long time to convince people to switch to these optimal solutions." — Brett Shafer [35:10]

• On Risks of Growth Expectations:

  "Four times book [value for a bank], either you have to have an insane return on equity or be pricing in a lot of growth… and it looks like they're pricing in a lot of growth right now." — Brett Shafer [57:28]

• On Underwriting Risk:

  "With any bank, there is just a level of trust in underwriting. Like you have to believe… because you don't have full visibility into these loans as a investor. You just don't." – Ryan Henderson [49:06]

Timestamps for Important Segments

• Introduction & Context: [00:32]–[03:59]
• SoFi’s Origin & History: [04:19]–[11:14]
• Member & Deposit Growth: [13:04]–[15:40]
• Competitive Advantages: [16:40]–[32:04]
• Product/Services Breadth: [33:16]–[35:09]
• Lending Business & Accounting: [36:01]–[50:47]
• Valuation and Investment Stance: [51:04]–[58:35]
• Wrap-up & Closing Thoughts: [58:35]–[59:12]

Takeaways

• SoFi has matured into a credible, fast-growing neobank with significant advantages in cost structure, breadth of offerings, and marketing scale.
• Deposit and member growth has been explosive, but skepticism remains on whether valuation fully bakes in future risk and competition.
• SoFi’s lending is now the primary business driver; strong underwriting history but banking cycles always present latent risk.
• Hosts see SoFi as attractive but currently fully priced; not rushing to buy at today’s valuation but would consider on significant share price weakness.

Closing Thoughts

The episode delivers a balanced, in-depth analysis of SoFi, highlighting operational strengths, clear competitive moats, and notable risks. Listeners are encouraged to read primary sources and the hosts’ newsletter for more detail.

"There’s always some risk when you’re paying, like you said, four times book for a bank… but I like the business." – Ryan Henderson [58:35]

For More

• Check the episode’s newsletter for in-depth quantitative charts and analysis (link in show notes).
• Follow Ryan and Brett for future portfolio and sector updates.
• Disclosure: This is not investment advice. The hosts may own securities discussed.