SoFi Technologies Inc. (NASDAQ: SOFI) shares surged 10% after the company announced a $2 billion deal with Fortress Investment Group LLC for personal loans.
The San Francisco-based fintech firm expects this partnership to enhance its loan platform, a key part of its strategy to shift toward less capital-intensive, fee-based revenue streams, according to CEO Anthony Noto.
Following the news, SoFi’s stock hit a year-to-date high on Monday.
Why Fortress partnered with SoFi
SoFi has seen strong demand for its loan platform, making the partnership with Fortress a logical step. CEO Noto praised Fortress for its seamless execution and recognition of the platform’s value.
Fortress Investment Group, represented by Dominick Ruggiero, expressed confidence in SoFi’s innovative approach and credit solutions, calling the deal a compelling investment opportunity.
SoFi has been on an upward trend over the past three months, bolstered by better-than-expected second-quarter earnings.
The company reported a 21% year-over-year revenue increase, reaching $587 million.
However, despite its growth, SoFi remains unattractive to income-focused investors, as the company does not currently pay a dividend.
Is it too late to invest in SoFi?
SoFi’s stock has risen more than 50% since late July, and with the US Federal Reserve expected to lower interest rates further, some, like Jim Cramer, believe there’s still room for growth.
Cramer, the host of Mad Money, views SoFi as an “incredibly well-run company,” emphasizing that it is more than just a student loan provider.
“It’s a fintech, and that’s what matters,” Cramer said in September, adding SoFi to his top picks for potential growth.
However, Wall Street analysts are more cautious. The stock holds a consensus “hold” rating, with an average price target of $8.14—indicating a potential 20% downside.
Market expert Crispus Nyaga remains bullish on SoFi, suggesting that the company’s innovative focus and potential for growth make it worth watching despite the market’s mixed views.
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