What happened
The stock market was having a much-needed strong day on Thursday, with all three major averages well into positive territory. However, fintech disruptor SoFi Technologies (NASDAQ:SOFI) is a major outperformer, with shares up by 12% at 10:30 a.m. ET, adding to yesterday’s double-digit gain.
So what
Today’s move appears to be a continuation of investor reactions to the news that SoFi is going to officially become a bank, as regulators approved its pending acquisition of Golden Pacific Bancorp, which clears the way for SoFi bank to begin operations as soon as next month.
Image source: Getty Images.
Yesterday evening on CNBC, SoFi CEO Anthony Noto said that the bank charter will allow the company to further build out its consumer products and will help the bank fulfill its goal of becoming a “one-stop shop” for customers. And it gives the bank much more freedom to set its own interest rates — Noto specifically said that it plans to give a “highly differentiated interest rate” to checking account customers.
After the news was announced, analyst upgrades started rolling in. Rosenblatt increased its price target to $30 (roughly double the current price), and Wedbush initiated coverage of the stock with an outperform rating.
Now what
In short, SoFi’s bank charter allows it to stop relying on third-party bank partners to fund loans and provide the infrastructure for its SoFi Money bank account product. This was a big regulatory hurdle for the bank to clear, so it’s not a surprise that investors are having such a positive reaction to it.
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