I recently read an article from The Motley Fool that discussed why SoFi Technologies’ (NASDAQ:SOFI) leadership is a big strength for the company. I absolutely agree with that observation. Moreover, that’s a big reason why I believe that SOFI stock is headed higher over the next few years.
In June 2020, I suggested that Bill Ackman and Pershing Square Tontine Holdings (NYSE:PTSH) consider merging with SoFi. That was a year before Social Capital Hedosophia Holdings Corp. V merged with SoFi, one of the top unicorns available. Ackman had his shot.
Instead, he chose to buy 10% of Universal Music Group from Vivendi (OTCMKTS:VIVHY) for $4.1 billion. The music empire will list its shares in September. The owners of PSTH stock will get shares in Universal Music Group and in a SPARC, which, according to Bloomberg, is a “special purpose acquisition rights company.”
It will take a while for those who bought shares in Pershing Square Tontine to know whether their decision to back the hedge fund manager was worthwhile. Its deal is certainly more complicated than the average SPAC transaction.
But Ackman could have given those who invested in his SPAC shares of SoFi, which has a top CEO, Anthony Noto, and a great leadership team. Those executives are worth more than the current $13.5 billion market capitalization of SoFi.
SOFI Stock Isn’t Very Expensive
Investors can have PSTH stock, which has no revenue, and a market capitalization of $4.4 billion. Or they can own a fintech dynamo like SoFi that reported first-quarter revenue of $216 million, up 151%year-over-year.
I think it’s possible for long-term investors to win with Ackman and Pershing Square Tontine. But those who don’t like complicated investments probably shouldn’t be holding its stock.
As for SoFi, it has a top-notch management team and board. But, again, that often doesn’t get baked into investors’ analysis of a company. But it really should be factored in.
In 2018, Noto joined the company from Twitter (NYSE:TWTR), where he served as Chief Operating Officer for two years and as Chief Financial Officer for two years before that.
Prior to joining Twitter, he was Co-Head of Goldman Sachs’ (NYSE:GS) Technology, Media, and Telecommunications investment banking unit. He also was the NFL’s CFO. And a long time ago, he served as an Army Ranger in the U.S. military.
As a believer in gender diversity, I am pleased that the SoFi management team is loaded with talented women working hard to grow the business while helping the company’s customers make smarter financial decisions. Its three main business units are all run by women, and its Chief Marketing Officer is also a woman.
Companies can’t successfully grow without having employee bases that reflect their customer bases. A bunch of old white guys at the helm is not going to cut it.
In February, SoFi donated $1 million to various organizations that empower people of color. The company has always embraced diversity and made that part of its core values.
Good common sense says that embracing diversity is a winning hand.
What About the Board?
SoFi’s board has some familiar faces.
Over the past three months, SoFi has made three additions to its board, including former Twitter CEO Dick Costolo, the former President of Goldman Sachs, Harvey Schwartz, and its newest appointment, Ruzwana Bashir, the founder and CEO of Peek.com, which operates a platform for booking experiences. She’s been named one of Fast Company’s Most Creative People in Business.
I encourage you to look more closely at its 13-person board. It’s a talented bunch. My only complaint would be that only three board members, or 23% of the panel, are women . I’d be concerned if I didn’t know that four out of seven of its top executives are women. That said, SoFi can do better in this area.
On a scale of one to ten, with ten being the best and one the worst, I’d give it a 7.5 on gender diversity.
The Bottom Line
I don’t care how great a business idea, product, or service that a company has. If it doesn’t have an A+ management and board, it’s never going to be a special company. It’s that simple.
Noto is committed to making SoFi a gamechanger for its more than 2 million members that use its borrowing, saving, spending, investing, and protection products.
Investors should have confidence in SoFi due to Noto’s strong hand on the rudder. That will come in handy whenever it hits choppy seas.
I think that long-term investors should buy SOFI stock as long as it’s under $20.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.
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