After an inauspicious start to life on the public markets via a SPAC merger on June 1, SoFi Technologies (SOFI) stock has made some powerful forward strides this week.

The fintech player is one of many trying to make its mark in the disruptive banking field, where big names are already staking out their territory.

“The competitive landscape is heating up,” notes Oppenheimer’s Dominick Gabriele. There’s a one-stop shop super app at industry giant PayPal, expansion at Square with a pivot toward the BNPL (buy no pay later) model, while large-bank peers are “focused on client retention.”

“That said,” the analyst went on to add, “We believe SOFI has a unique position in the market and can adapt its business model to continue its already-strong execution in cross-sell among its current customer base while obtaining new member acquisition. We don't expect results to occur in a straight line, yet believe investors should focus on SOFI's MT/ LT prospects.”

Making use of the company’s revenue forecasts, the analyst has laid out expectations for “cumulative members” through 2024. SOFI is targeting a base of 500 million accounts, and Gabriele thinks the fintech player can reach a market penetration rate between 2 to 3%. More precisely, the analyst estimates a 2.68% penetration rate by 2024, amounting to 13.8 million accounts. “This translates to ~58bps on average annual market share capture,” Gabriele explained.

Overtime, Gabriele believes the average account will shift toward roughly two products while a mix shift "migrates the average revenue per product higher.” The analyst estimates ARPU (average revenue per user) is currently likely below $20 but as the mix of products change, Gabriele expects ARPU will move higher to more closely resemble that of large-bank peers such as J.P. Morgan and Bank of America.

So, down to the nitty gritty, what does it all mean for investors? Due to a “culling of peer comparisons,” Gabriele lowered the price target from $25 to $23. Nevertheless, there’s still room for a 40% uptick over the next 12 months. Gabriele’s rating remains an Outperform (i.e., Buy). (To watch Gabriele’s track record, click here)

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Only one other analyst is currently keeping an eye on SOFI’s progress, also claiming the stock is a Buy, making the analyst consensus on this one a Moderate Buy. Combined, the average price target stands at $27.5, suggesting 12- month upside of a strong 68%. (See SoFi stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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