SOFI: I'm An Investor AND A Customer Mar. 16, 2023 6:58 AM ET by: Uncle PennyBags Summary SA Authors have discussed SOFI numbers and risks very deeply, but what about how they differentiate? SOFI is making BANKING great again. They are doing what other banks used to do but don't any longer, reward customers. SIVB fallout will bring business to SOFI in a flurry and likely provide a tailwind medium term with short term sector headwinds. Preview - Contributor Center | Seeking Alpha https://seekingalpha.com/submission/preview/5852604 1 of 8 3/16/2023, 12:23 PM Make BANKING Great Again gguy44/iStock via Getty Images Alexander Hamilton pioneered The First Bank of the United States because post revolutionary America was in debt and needed to bring individual states together to push different state currencies into one national currency for orderly interstate commerce. It was critical in bringing the country together, putting one accepted currency into the spotlight, and bringing solidarity to a divided country. It was founded when Philadelphia PA was still the nation's capital.Banks are quite different these days. They move currency, lend to businesses and individuals while maintaining the common USD currency for consistency, but the digital era is very much changing how we move and use money in ways our founding fathers never thought possible. In this, for decades, individuals used banks so that they could receive interest on their deposits, have a safe way to store funds, and use bank services to buy homes, cars, and large ticket items.But big banks these days don't much help customers anymore. In fact, they just seem to find ways to "tax" common citizens with endless fees, paying depositors low interest payments while they take deposits and earn much higher rates of return. Paying customers scraps while big banks just reap endless profits and pay management crazy high salaries is exactly why a bank like SOFI is coming to spit in the face of the banking industry and turn it upside down. A New Generation Calls Banks Out Cryptocurrency stands on the grounds of throwing out the ways of old and ushering in a new generation that hates the old systems in place. Many Preview - Contributor Center | Seeking Alpha https://seekingalpha.com/submission/preview/5852604 2 of 8 3/16/2023, 12:23 PM didn't know if the concept of cryptocurrency had legs, but it certainly does and proved a valid point. The generation of today saw old financial systems as antiquated, unfair, and set up to make people fail, not prosper in current times. SOFI is doing the same thing for banking. By actually giving higher interest rates on checking account balances, savings account balances, and keeping with the ease of all digital transfers really speaks to the needs of today's customers than does the ways of the old banking system. By rewarding the customer for bringing their money to SOFI, SOFI seems to be a bank for the people by the people. That might be a bit much, but it's not far off base. By treating customers with respect for the privilege of managing their money instead of big banks of old that treat customers like a revenue stream, a burden, and nothing more, customers are starting to understand the value behind SOFI's offering. Rapid Growth Need proof of concept? One has only to look at the blistering hot growth of SOFI over the last few years. Preview - Contributor Center | Seeking Alpha https://seekingalpha.com/submission/preview/5852604 3 of 8 3/16/2023, 12:23 PM SOFI Q4 Earnings Presentation (SOFI Q4 Earnings Presentation) They are consistently taking business away from larger banks when customers realize they can get so much more out of a bank that doesn't have to buy land, pay leases, and pay thousands of branch employees to do what proper digital systems can do in seconds. By saving tens of millions on not having brick & mortar locations, SOFI is passing those savings onto customers and people are flocking to it. An Investor Becomes A Customer After months of taking a deep dive into SOFI as an investor, learning about what they do and what they can offer me, I finally dove in as a customer a month ago. Previously, I had been with JPM Chase and Wells Fargo with accounts at both institutions for the last 25+ years. I was worried about changing direct deposits, moving funds, and changing my banking habits to an entity that didn't have any brick & mortar locations. It's awfully intimidating to make such a move after so many years doing it the other way.That being said, I was shocked at how quickly I was actually to able to move everything over. it literally was done within a week. Most of that time was digital transfer time of physical funds, it only took me minutes to set up my account online and about 3 hours to input all my direct deposit information at my home loan bank, my car loan bank, and all my other Preview - Contributor Center | Seeking Alpha https://seekingalpha.com/submission/preview/5852604 4 of 8 3/16/2023, 12:23 PM accounts like brokerages and credit cards as well as update my employer records with my new direct deposit information. It was WAY more daunting in my head than in real life. The Customer Experience In 2020, I moved to a state and city where I literally did not have any branch of my banks located in this town. The closest Wells Fargo or Chase was 4 hours away. I thought this was going to be a huge problem, but believe it or not, after 3 years I have NOT needed to go to a physical branch once. In that time period, I have bought and sold a home, changed jobs, and had that across country move. Not once have I needed to go to a physical branch and only went to one of their ATM's once to deposit cash from an item I sold for $2500 locally. This was very eye opening in that it made me realize, my way of thinking was very old school and I needed to embrace change a little more.On that note, SOFI was the clear choice with who I wanted to bank with now. They pay me over 20X more interest on my checking account balance, 3X what I was getting on a savings account, and have lots of options for a digital lifestyle of today. I have to admit, I also got very very tired of calling Wells Fargo customer service or Chase customer service having to complain about an incorrectly billed fee for one reason or another, or getting some random debits on my checking account out of nowhere. Yes, that happened several times. Not only that, some employee within Wells Fargo opened a SECOND checking account in my name without my knowledge and I had to report that fraud and it was a whole mess for a few weeks.I suppose that sort of thing can happen at any bank, but the point was, every time I called or had to deal with someone at my bank to get something simple done, I was treated like a burden than Preview - Contributor Center | Seeking Alpha https://seekingalpha.com/submission/preview/5852604 5 of 8 3/16/2023, 12:23 PM I was an asset. I was made to feel that they were doing ME a favor by having my business vs being a valued customer that my bank earned the PRIVILEGE of my business. It's VERY early innings, but I feel that SOFI might just be that bank. The Investment Experience As a bank stock, SOFI is much more volatile in today's investing paradigm. Is it a tech company? Is it a bank? Who's to say. But I will say, that I quickly realized that my ideal way to play this stock was a pattern I've become VERY familiar with and astute, options. In the last few months, I've quietly loaded January 2025 $3 calls on opportunistic dips. I have come to realize after watching the stock for months, SOFI loves to rip higher and then dip pretty deep after earnings. It has nothing to do with the earnings themselves, but some stocks just end up developing a pattern that big money takes advantage of. I don't fight it, I just learn to play it accordingly.As such, I sell covered calls against my leaps on steep run ups and them buy them back for pennies on the dollar on the stiff drops. This has allowed me to make an average of 46% on an annualized basis on my investment. Yes, it takes some risk management and YES it takes much more time and patience with active management. This is NOT a tactic for passive investors, but you have to have some basic fundamentals. You TRULY must BELIEVE in the stock long term despite what the market may do short term and stay convicted.You must have a deep knowledge of options, understand the risks involved in trading options, and have the patience to take advantage of market opportunities when they arise. Preview - Contributor Center | Seeking Alpha https://seekingalpha.com/submission/preview/5852604 6 of 8 3/16/2023, 12:23 PM You have to live and breathe the stock. Listen to conference calls, understand the business inside and out, and see where management's vision is taking the company. Ideally, the options chains have robust volume lending to lots of liquidity for quick in's and outs, and weekly options are a HUGE plus.It is better if the stock is priced under $20 as well. Stocks with fair market caps that trade at lower dollar amounts lend to lower premium on options leaps and thus, magnify the upside. As a real life example, on the spike after the recent earnings, I sold 2024 $7.50 calls against my $3 2025 leaps. I sold those for $3.25 each. I only paid an average of $3.18 on my 2025 leaps when the stock dipped to the $4's on an average of 500 contracts. By selling those calls, I essentially got ALL my cash back and created a "free spread". While that in itself is an amazing trade, I didn't stop there. I have recently repurchased all those sold calls BACk on the dip to $5 this week on the SIVB chaos for $1.80 per contract.$3.25 - $1.80 = $1.45 difference / minus commissions. $1.45 X 500 contracts = $72,500 I pocketed back.This I pay myself some for living expenses and the rest I reinvest back into the stock. It's very possible SOFI gives me this opportunity every single earnings report, maybe not. Regardless, playing it this way actually makes my liability dip down near zero after a few swings of this nature and thus, I get my money back and can be a part of the story at no cost. If SOFI wins big, and I think it will, I win big. If not, no harm no foul once my initial investment is recouped. Concluding Remarks / Risks Preview - Contributor Center | Seeking Alpha https://seekingalpha.com/submission/preview/5852604 7 of 8 3/16/2023, 12:23 PM With any investment, there are always risks. SOFI has some ways they do accounting that financial experts take issue with. For a deeper dive on the numbers, I HIGHLY suggest reading the article recently published by author Data Driven linked here . It was obvious why it was chosen as Editor's Pick, it was fabulously detailed and well written.as an investorHowever, I hope I have provided some good general points as to why I think the company will flourish, as an investor and as a customer. Perhaps my outlay of how I play the options chains will give investors another way to tackle this great company, or any other they like for that matter. But I believe SOFI has a bright future regardless of how you may want to play it, or not play it and maybe just be a customer and see the value first hand. Disclosure: I/we have a beneficial long position in the shares of SOFI either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Preview - Contributor Center | Seeking Alpha https://seekingalpha.com/submission/preview/5852604 8 of 8 3/16/2023, 12:23 PM