SoFi Short Sellers Are Fighting Back...

Sofi recently had an app upgrade where they went from version 2.0 to version 3.0 this was a major upgrade and in the past we speculated what this could mean for new upcoming products this week it seems as though we might have an answer for that in addition short sellers are betting against the stock in higher volumes the second highest short interest on record for Sofi in addition we had Galileo news a new product offering for Galileo and we had news around sofi's business checking partnership I'll cover all of this in this video so let's jump right into it so as always this is a weekly recap of Sofi news and if you are new to this series we cover all kinds of Sofi related news at the end of each week I'm doing it a little bit earlier this time around I'm recording this on Wednesday and the only reason is because I'm going to be traveling throughout the remainder of the week but if there's something significant I'll make sure to hop on and share some thoughts in terms of the stock price the stock has been hovering around that $750 Cent range last week we closed above it which is significant because 750 is sort of a Battleground for options whether it closes above or below 750 so we'll see where it closes out this week I think as of today it closed at like 748 or so it almost touched the $8 range and then came back down now moving into the news for the week on Monday we got news that Sofi was lowering their apy on checking in savings from 4.6% to 4.5% in a statement they said this was due to market conditions and I found that interesting and I think there's really two main ways you can perceive this news I made a post on X saying that the higher for longer apy narrative is part of the core competitive Advantage for Sofi because the bank Charter and the vertical integration provides them more flexibility to keep rates higher as competitors are forced essentially to lower their own rates and ultimately this serves as an attractive offer for new entrance into that Sofi ecosystem so basically keeping rates higher for longer contributes to Sofi having a higher member addition for people who are looking for the best rates out there so to see this news it was surprising to me because we haven't even had the First Rate cut yet and yet Sofi is already lowering their apy in anticipation now of course I got comments on my thread saying that this is only 0.1% and other competitors have already started lowering rates as well and they've even lowered rates by higher amounts than Sofi has so it's not really a big deal and yes I understand all of that I just think thematically it doesn't make sense to me because it goes against that whole narrative or that competitive advantage that they had and when you think of the apy out there Sofi is not at the top of the list Lending Club for example has raised their apy to 5.3% and so if you're looking at these offerings just ranked from the top to the bottom soofi would fall somewhere towards the middle of the pack in terms of apy so it's really not a differentiator for them from that perspective especially as they keep lowering and so this is also why it took me by surprise is because we want it to be a differentiator for them because they have the ability to do so now of course this is beneficial for the business because it's more lucrative for them to lower their apy the other side of the equation is that management is always going to do what's in the best interest of the growth for the business they're operating on data that we don't really have from the outside looking in and if you're putting on an optimistic lens the fact that they're lowering rates could also signal that they're already seeing strong enough demand in members and in deposit growth that they don't really need to keep rates very high because it's sufficiently attractive as it is and so it's essentially like a lever to quell or Stoke that demand but of course this depends on your own interpretation if you're looking at it from a more positive lens or a more negative lens a more itical one at the end of the day the management team is going to operate at the best interest of the business and they're going to use the data available that they have that we don't necessarily see to make that judgment call and one other thing that I'll say while I'm on the positive note of this news is that you could argue that this is a good thing because we know that price is the cheapest user acquisition tool out there because essentially with price it's erased to zero so if they're lowering that apy and they're still seeing sufficient demand out there then that's good for the entire value proposition the business because if price is the only lever that you can pull the moment that a competitor comes in with a marginally lower price all of your customers are going to flock to that competitor and so this is why I say it's a race to the bottom for the sustainable growth a business needs a sticky value Pro opposition that is not just the price that they charge right consumers should be willing to pay a higher price or get fewer benefits to be a part of that overall ecosystem and so I think that the more Sofi moves in that direction the better that ultimately it's going to be for the longevity ity of their user base moving on later on Monday we saw that short interest continues to rise shorts are continuing to add to their positions doubling down this is as of August 15th short interest came in at 192 million shares sold short representing an increase of 11.3 million and keep in mind here that the short interest data is two weeks delayed so right now we're at the end of August and we just got the numbers for Mid August right so it's not to the minute accurate and this 192 million shares sold short marks the second highest ever short interest for Sofi behind the March 15th numbers which came in at 209 million shares sold short the short interest for Sofi is over 18% of the float and not only are many people betting against Sofi but they're doing so despite the consistent execution in the results Sofi just reported earnings you know several weeks ago and in large part crushed their numbers and so to see the short interest continue to rise to me further amplifies that disconnect between the stock and the fundamentals of the business and it's more interesting especially when we consider the macro backdrop of a rate cut coming in September we have expectations that are being priced in the market from a rate cut perspective last week on the bootleg weekly and and soofi weekly we talked about the Jackson Hole remarks around the market flip-flopping between a 50 and a 25 basis point cut it seems as though the markets are pricing in now a 25 basis point cut that's the favorite at least and so we're very likely to get that in September and we know that this is going to help Sofi not only as the market goes risk on and more money floods from money market funds into maybe high growth names such as Sofi but also from a fundamental perspective because it's a Tailwind for their student loans and their home loans segment so the business is going to benefit from that and knowing that it's even more surprising to me why short interest would go up like they had great results and they have a good Catalyst coming in a couple of weeks why is short interest going up I don't understand it moving on on Tuesday we got a press release around Galileo releasing a B2B expense management offering for MasterCard smart data the press release reads that Galileo is now offering fintech clients like Row the ability to connect their business customers to MasterCard smart data which is a market leading expense reporting and analytic suite and this will allow them to integrate detailed transactional data directly from MasterCard so as to reduce time and complexity of managing corporate expenses the report highlights that companies spend nearly 3,000 hours correcting errors across roughly 51,000 expense reports annually and so through that Direct integration this is obviously going to be a time consumption benefit for a very manual process the fintech company row is one of the first companies to integrate MasterCard smart data through Galileo onto their platform and overall to allow their business customers to automatically injust detailed purchase information into their existing enterprise resource planning software or expense Management Systems so it goes without saying that for row specifically as well as other fexs that have a manual process that is very time time consuming this offering is going to be very beneficial I mean the press release continues to list some benefits and I won't spend too much extra time on this as Galileo rolls out a new service every couple of weeks essentially on a very consistent basis and the more that they roll out the more it builds this Mo even further making the Galileo product so much stickier across these cohorts and I think these case studies in general are going to help Galileo to further translate that value into dollars and cents for these businesses and while we're on the topic of Galileo Tanner covered this on his fintech frenzy a couple days ago looking at the open engineering positions on Galileo's website of the 16 open engineering positions nine of them are for Sofi money cyber Bank Readiness and that means that Galileo is ramping up hiring specifically for Sofi products likely what this means is that Sofi money has fully transitioned onto the technicist Cyber Bank core platform onto the Galileo stack essentially and by leveraging Galileo's technology Sofi money can have vertical integ ation it can have more flexibility it can have faster time to launching new products massive cost savings a whole bunch of benefits right and so in his video Tanner was speculating that this 3.0 change is as a result of this Tech architecture moving inhouse onto the Galileo stack again this is all speculation at this point and remains to be confirmed by management but very positive once we put two and two together and you know while we're on that topic of interesting findings that you never find in news articles I mean you'll never find a CNBC article Lu thing around the hiring for sofa and Galileo or the App Store reviews and pointing those things together to you know come up with a conclusion it's just a dedicated sofa community that does that I also saw a post on Wednesday by Kyle who highlighted that AMX is no longer listed in the business checking Partners now if you remember a few weeks ago Sofi announced business checking through Partnerships with Novo and with AMX and very quickly they've dropped AMX from the mix now of course we can all speculate as to why that is whether it's a negot iation or some type of referral falling through we're not sure right now we're only speculating but the only partner that currently shows up there is Novo on the sof weekly podcast a couple weeks ago we had Tim Sweeny as a special guest to help us make sense of the business checking offering strategy through Partnerships as opposed to doing it in house and the conclusion of that conversation was that by doing it through a partnership it didn't really allow for the flexibility to easily transition and take those customers back into the ecosystem once they've already referred those customers out of the ecosystem and after Sofi released their own in-house business checking alternative but what we don't know is we don't know the intimate details of what the referral structure looks like what sofi's rewards are going to be as a result of this deal so we're left in the dark as to what this partnership looks like and what it can feasibly result in in terms of revenue for the business but what we do know right now is that AMX was there a couple weeks ago and AMX is not here now finally earlier today on Wednesday we got news that the Supreme Court is pushing back on Biden's plea to restore the student debt plan and this is is something that we've covered repeatedly so I won't make a big deal about it this won't make a giant dent in sui because the main negative Catalyst for Sofi was the moratorium not necessarily the Forgiveness because a lot of sofi's student loan cohorts won't fall in the Forgiveness cohorts at all they're either higher FICO or they're higher income earners they just don't fall into that bucket right and so there's no overlap the moratorium however did hurt Sofi quite a bit and I think one other thing that does hurt Sofi is this forgiveness period around the interest being paid and the acral there's also forgiveness overall on the principle from the administration and all of this is being pushed back by the Supreme Court this should be seen as a Tailwind because student loans are ramping up as rates will fall student loans are going to ramp back up and if I was a betting man which I totally am the administration is going to push back on this especially as the elections are around the corner and this is essentially an election promise that was made and it applies to a very large portion of the US voting demographic so we'll see where that ends up but again it's pretty much a nothing burger at this point as Sofi student loans are back up and running after that moratorium and really this won't really affect Sofi at all so these are the news pieces that I saw over the past three days and of course we're going to see where the stock ends up closing this week if there's something major I'll make sure to hop on and share my thoughts otherwise we're just waiting right now for rate cuts to actually happen and for that to potentially lead to a reating of the stock or a repricing of the opportunity that stands before the this business thank you so much for watching and I will see you in the next video