Harry and Meghan just proved SOFI Stock is a ‘royal’ bet

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Sofi Technologies (NASDAQ:SOFI) action is in the spotlight today following a major bet from Prince Harry, Duke of Sussex and Meghan Markle, Duchess of Sussex. The pair just helped Ethicsa sustainable investment start-up, raise $50 million in its Series C funding round. This investment highlights the continued funding of fintech companies, even during an economic downturn.

Ethic’s exact valuation was not disclosed, although CEO Doug Scott said it was an “upside round”. The fintech startup seeks to create custom portfolios based on a given investor’s interests, such as climate change or women’s rights.

SoFi does not offer custom wallets, although its platform does offer stock and crypto trading. Yet, as a publicly traded company, SoFi holds an edge over its fintech startup counterparts, as it is able to acquire investors more easily and easily. The public status of the company also gives it notoriety and brand development.

SOFI Stock in Focus Following investments in Fintech

Y Combinator (YC) is a well known technology accelerator which invests capital in opportunistic startups. The company invests $500,000 twice a year for a large number of companies. During YC’s summer batch, one-fifth of its investments went to improving fintech.

Payments was the most popular segment among YC’s fintech investments. Neobanks were the second most popular. Investments in neobanks, like SoFi, have exploded in recent years. The summer batch included 11 neobank companies, while the 2020 and 2021 batches only included about one or two neobanks. These increased investments highlight the growing demand and acceptance of neobanks.

Meanwhile, SOFI shares were also supported by a recent Upgrade from Bank of America analyst Mihir Bhatia. The analyst raised its rating from “buy” to “neutral” and raised the price target from $8 to $9. As of June 30, SOFI was trading at a book value of just 1x, which Bhatia says is an attractive valuation. Shares closed at $5.27 on the day of the upgrade.

Bhatia sees a “significant catalytic path” ahead due to the end of the student loan moratorium next year and the company’s multi-year collaboration with NFL star Justin Herbert. SoFi is also somewhat insulated from subprime risk, as it only serves customers with acceptable credit ratings. Bhatia concluded that he saw upside potential for the fourth quarter and 2023 growth estimates.

At the date of publication, Eddie Pan held (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.

Eddie Pan specializes in institutional investments and insider trading. He writes for InvestorPlace’s Today’s Market team, which focuses on the latest news on popular stocks.