You don't necessarily need a lot of money to invest in the stock market. An initial investment of even just $100 is a good place to start, with a plan to invest more on a regular basis. It's made even easier with fractional shares investing, which allows you to buy stocks by dollar amount as opposed to number of shares. So, if you only have $100 to invest, you could buy $100 worth of a stock like Apple or Microsoft and realize their gains, or losses.
These are indeed both great options, but if you want to buy whole shares of a company with only $100 to invest, you might want to consider SoFi Technologies (SOFI -0.13%). SoFi is a fintech stock with a lot of potential and an opportunity to be a major disruptor in the banking space. It went public earlier this year and is currently trading at around $15 per share, up about 25% year to date. At the current price, you could buy seven shares for $105. Here's why that's a good investment.
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Growing like wildfire
SoFi is a digital personal finance company that has been around since 2011, but just went public in June of 2021. It started as a student loan lender, but it has expanded into banking, personal loans, credit cards, mortgages, personal finance, investing, and outsourcing its technology services over the years. Its services are all offered digitally through SoFi's mobile app, as the company seeks to build a one-stop digital shop for financial services.
It has been growing like wildfire, too. SoFi posted a record $272 million in net revenue in the third quarter, up 35% from a year ago. Its total number of members has nearly doubled over the past year to 2.9 million, and is up significantly just since the end of the second quarter when there were 2.4 million members. The use of its products has also skyrocketed over the past year, up 108% to about 4.3 million products. That's an increase of 24% from the end of the second quarter.
SoFi has three business lines: lending, financial services, and technology services. Lending is the largest, generating about 77% of revenue. It the third quarter, lending revenue was up 30% year over year to $210 million.
Financial services include the investing, credit card, direct deposit, and banking businesses, and is the smallest of the three with about $12.6 million in revenue. But it's the fastest growing segment, with revenue up 290% year over year.
The technology arm is also booming, as it did $55 million in revenue, up 29% year over year. In this business, SoFi farms out its expertise, helping other companies and organizations develop their own digital banking products and platforms. SoFi essentially acquired this business when it bought Galileo in 2020, but it has grown rapidly under SoFi with 89 million client-enabled accounts at the end of the third quarter, up 80% year over year.
Lots of potential
SoFi is not yet profitable, as it operated at a $30 million net loss in the quarter, but the loss is down from $48 million in Q2. Thatʻs not unusual for a young company, as it is investing heavily in its technology and infrastructure and ramping up its operations. But profitability will come soon, particularly at this rate of client and member growth.
SoFi has two advantages that set it apart from the competition. One is its technology business, which is a revenue generator on its own (in a booming industry, I might add). But the technology business also expands SoFiʻs ecosystem, opening up the opportunity to cross-sell its banking and investing products to that growing universe of clients.
The second is its forthcoming bank charter, potentially active by the end of 2021 or early 2022. SoFi applied for a bank charter after its acquisition of Golden Pacific Bancorp earlier this year. This new banking holding company, overseen by federal banking regulators, would allow SoFi to expand its lending capabilities, take deposits, and not rely on third-party banks for capital -- which will drive down costs. It also opens up new marketing and selling opportunities for its other financial services products. This could be a game changer for SoFi.
So even if you just have $100 to invest, seven shares of SoFi at about $15 per share would be a great long-term investment in a company that appears to have a bright future.
