The financial services industry is massive, accounting for a significant portion of GDP. What's more, it's perhaps the oldest industry.
The movement of money between rs and borrowers, as well as other ducts related to capital, has always been in demand. And it ly always will be because of how critical this is to our economy.
Some well-known heavyweights dominate the industry. However, that doesn't mean newcomers can't challenge the quo. This is what SoFi nologies (SOFI 2.
56%) is doing: finding success by leveraging nology. So far, its achievements have been impressive.
This fin stock has soared 151% in the past year (as of June 24), winning over investors in the face of heightened volatility. But can SoFi be a millionaire maker over the long term.
Image source: SoFi nologies. SoFi's momentum continues This year has been anything but smooth sailing for investors.
Besides geopolitical tension, there continue to be macro fears, especially around a possible recession hitting the U. Despite this backdrop, SoFi keeps humming along.
After reporting 26% revenue growth in 2024, the saw the top line expand by 20% in Q1 ( March 31). The gains continue to be broad-based across the financial services, platform, and lending segments.
SoFi now has nearly 11 million customers, a figure that has increased rapidly in the past.
The industry is packed, as consumers can open bank accounts, brokerage accounts, or get loans from an unlimited number of other options.
A experiences growth SoFi only if it's viding a superior experience. With an all-digital format that puts nology at the heart of everything, SoFi makes banking incredibly easy for its customers.
These people are choosing to move their money over to SoFi. As of March 31, the company had $27. 3 billion in deposits on the balance sheet, up 23-fold from three years before.
Not only does this demonstrate the trust that people have in SoFi, but it also vides a low-cost source of funding for the to support loan growth.
In other words, banks that struggle to grow their deposits are bably at a disadvantage in the industry. This isn't a blem for SoFi. CEO Anthony Noto thinks that SoFi is just getting started.
He sees the company one day becoming a top 10 financial institution in the U. If SoFi gets even remotely close to this ambitious goal, there is a lot for holders to get excited.
Patience and conviction As investors, we all want to find that one stock that can generate substantial wealth over the long term.
Getting in early on a that grows its revenue and earnings indefinitely while offering ducts and services and building an economic moat is the ideal situation.
However, investors must realize that it's not a good idea to put so much emphasis on a single company. Buying and holding a diversified set of stocks is key to success.
That being said, SoFi possesses characteristics that could turn holders into millionaires. Of course, it requires patience to hold the stock for decades.
And investors must have conviction that SoFi's success will continue well into the future.
Given that SoFi is currently a drop in the bucket in the massive financial services industry, there should be an opportunity to expand for quite some time.
Competition is always something to think, but so far, SoFi has given investors no reason to be skeptical. The current valuation, with s trading at a price-to-earnings ratio of 38.
7, also doesn't look expensive. That's if you believe, as the management team does, that net income will keep rising briskly in the years ahead. SoFi might turn you into a millionaire one day.
Whether or not that outcome actually happens, the company should still be considered a smart addition to anyone's portfolio. Neil Patel has no position in any of the stocks mentioned.
The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.