Opinion: SoFi joins the meme party – does that mean parents have gone home?
We’re not saying retail investors are getting a little stale with their meme stock picks, but we’re are saying the hottest new thing is a fintech lending platform that wants to be a bank and is run by a former Goldman Sachs GS,
Social media marketers were buzzing on SoFi Technologies Inc. SOFI,
news on Wednesday that the online lender had obtained approval from the Office of the Comptroller of the Currency and the Federal Reserve to acquire Golden Pacific Bancorp Inc. and become a bank holding company.
The stock opened almost 20% higher on Wednesday morning before trading at around six times its average volume to close up 13.7%. According to data from HypeEquity, mentions of SoFi’s ticker on Reddit increased by more than 1,500% over a 24-hour period.
While the actual news is impetus for the move, this huge trading volume and social media attention makes SoFi very meme indeed.
The approval gives SoFi the banking business that CEO Anthony Noto – a former senior banker at Goldman and Twitter’s CFO – has pursued since taking office in early 2018, and a turnkey way for SoFi to lower its cost of capital. which is – not to be wonky – a huge thing for a company that lives and dies on the rates it can offer customers on its wide range of lending instruments.
By being able to offer checking and savings accounts while simultaneously accessing the Fed’s rebate window, SoFi is now a hybrid thing, an online student loan refinancer that can also sell you a rate CD. fixed.
To the many “monkeys” on Reddit who have been a bit burned by recent performances of ur-memes like GameStop GME,
and AMC Entertainment AMC,
(more on them later), SoFi’s “adult” was seen as a new kind of sexy.
“Well, SoFi is now both a growth stock and a bank,” user No_Rule_1716 proclaimed on subreddit r/WallStreetBets. “It’s a great solid investment with billions in cash on the balance sheet.”
“This is great news for a bank that is already a leader in digital transformation,” celebrated user BeginningProgress921 on subreddit r/SOFIStock.
The idea that SoFi might be susceptible to short compression was also popular on social media, but data from Ortex showed that around 11% of SoFi’s free float was sold short, making targets of quite thin compression.
What was hard to find on social media or elsewhere was the idea that SoFi’s rise highlighted the continued downfall of yet another stock of memes and potentially set them on the path to ending up in nature and build a new life together.
Violet prose aside, Robinhood HOOD shares,
fell 3.5% in Wednesday’s session, adding to a staggering drop of more than 60% since the commission-free trading app went public in July 2021.
Robinhood, as some remember, dreamed of becoming a bank itself, giving it the kinds of capital advantages and stability that SoFi will now enjoy. On the other hand, SoFi lacks what many financial services giants (Goldman, JPMorgan JPM,
) covet now, and that other titans (Morgan Stanley MS,
) paid through the nose to get: a commission-free trading platform that creates massive amounts of order flow and trading data.
SoFi’s market capitalization at Wednesday’s market close was $9.7 billion, according to Dow Jones data, while Robinhood’s remained at nearly $12.4 billion, making the idea that Noto could buy Vlad Tenev and Co. almost impossible.
But based on SoFi’s new profile and Robinhood’s plummeting value, how long will it take in a rising rate environment for these two to notice they want what the other has? ?
Hot new couple alert indeed…
Dark days for Mother Memes
Now we’re not going to give more dirt to the eyes of the real diamond-handed monkeys who are always HODLing big memes, because it’s not cool and they don’t deserve it because we enter in 2022 open to the notion that value investing is a noema/noesis thought experiment more applicable to Wittgenstein than to Buffett.
That said, here’s a chart of both stocks in 2022:
It’s not great.
This chart by no means means that neither stock is rebounding, but AMC is now below $20 for two straight days for the first time since the May 2021 short squeeze, and GameStop is holding the $100 level.
For the latter, Tuesday’s blockbuster announcement that Microsoft MSFT,
would buy Activision Blizzard ATVI,
for $68.7 billion is perhaps very bad news.
According to a note from Jeffries analyst Stephanie Wissink, the merger could pose a “walled garden risk” for GameStop if Microsoft chooses to do things like make Activision’s hit games available only on the Xbox gaming system. from the tech giant, which would impact GameStop’s bottom line. .
What is that Is it that That means it’s either the biggest buyable drop these stocks have seen since meme stocks became a thing, or it’s time to take what’s still on the table and turn to d other corners of the market that are fertile for a second guerrilla action.
SoFi is one example, but it’s pretty hyped by meme stock standards, which means the “hedgies” might see it coming.
Either way, the next few weeks are shaping up to be big ones for Mother Memes as we head into the one year anniversary of the big short squeeze.