Latest / Felix Nikolas Prehn's Podcast / Felix Prehn - ❌ SoFi: I’m Sorry + Stock Market News 03 January 2025

Transcript

Felix Prehn - ❌ SoFi: I’m Sorry + Stock Market News 03 January 2025 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: Felix, I know a lot of you are worried about SoFi and the doom and collapse that's caused by a downgrade that hit the stock yesterday and I'm always very bullish on SoFi.
• 0:10
  Speaker 1: I thought I'd run you through what it actually means, what I'm doing and also some lessons we can learn from this.
• 0:16
  Speaker 1: So I'm traveling here, but I thought I'd record a quick one for you.
• 0:19
  Speaker 1: So what happened?
• 0:20
  Speaker 1: An analyst outfit which is like a tiny sort of boutique investment bank called keith brouillette and woods and I have to read that off because I've never heard of them, kbw shall call them.
• 0:31
  Speaker 1: They downgraded so far, price target six dollars fifty.
• 0:35
  Speaker 1: Now.
• 0:36
  Speaker 1: The first thing is and I'd ask you this how often have you had a tip from an analyst that made you a ton of money?
• 0:45
  Speaker 1: I can't think of a single time.
• 0:46
  Speaker 1: Did the analysts discover Amazon, tesla, palantir, any of those stocks?
• 0:51
  Speaker 1: No, they didn't.
• 0:52
  Speaker 1: They never understood them, and if they did cover them, they said this is a load of nonsense.
• 0:56
  Speaker 1: That's kind of the first thought.
• 0:57
  Speaker 1: It's always like analysts tend to follow the market, not precede.
• 1:02
  Speaker 1: It Very, very rare that they actually have that kind of influence.
• 1:06
  Speaker 1: There is an amazing Twitter account called Data Driven Investing.
• 1:10
  Speaker 1: He's a lovely chap.
• 1:11
  Speaker 1: You should definitely give him a follow, and I screenshotted a couple of his data points because it's easier for me here.
• 1:16
  Speaker 1: And what is he saying?
• 1:17
  Speaker 1: Well, yes, it did collapse the stock by second worst day in so-called history, or something like that.
• 1:23
  Speaker 1: And he went through their forecasts and their predictions from a year ago and guess what?
• 1:35
  Speaker 1: They were wrong on revenue massive.
• 1:38
  Speaker 1: They were wrong on margins, they were wrong on EBITDA.
• 1:40
  Speaker 1: They were wrong on actual earnings per share.
• 1:43
  Speaker 1: So they estimated that right now, sofi would be making no money whatsoever, when actually they're making four or five cents per share, which is a huge difference.
• 1:53
  Speaker 1: It's a difference between a profitable company and non-profitable company.
• 1:56
  Speaker 1: So do they actually understand the business?
• 1:58
  Speaker 1: Probably not.
• 1:59
  Speaker 1: So how does it work as an analyst?
• 2:02
  Speaker 1: So when I worked in a bank, we had analysts.
• 2:03
  Speaker 1: They sat in a room next to us and they would crunch numbers.
• 2:07
  Speaker 1: They have a spreadsheet and we'd go to meet CEOs and CFOs of these companies together with the analysts.
• 2:13
  Speaker 1: And the analysts would never really ask the big picture question.
• 2:17
  Speaker 1: They would never really ask very much about like what are you doing?
• 2:19
  Speaker 1: They would be asked like how many units did you sell?
• 2:21
  Speaker 1: How much money did it cost?
• 2:22
  Speaker 1: They'll be asked like how many units did you sell, how much money did it cost, how much money did you make?
• 2:25
  Speaker 1: You know that kind of stuff like very, very specific stuff and never actually really get into the vision of a growth company.
• 2:32
  Speaker 1: That's why analysts tend to be very, very bad at Predicting the next big stock.
• 2:37
  Speaker 1: They're very, very good at Taking a really boring business like a coca-cola or okay, well, how much are they going to sell?
• 2:45
  Speaker 1: Because they've been doing it for 100 years pretty predictable, plus minus 2% or 3%.
• 2:49
  Speaker 1: Now, what they're really missing here is that SoFi is gaining market share.
• 2:56
  Speaker 1: They managed to bring in more loan business even when the market was terrible.
• 3:02
  Speaker 1: They managed to deleverage, so actually reduce debt in borrowing, and bring in lots of money through deposits, because people are depositing money on SOFA.
• 3:13
  Speaker 1: And all of this was happening during a time when the economy was in crisis in the US, during a time where the US government made student loans non-repayable so nobody would therefore refinance them.
• 3:25
  Speaker 1: And the era we're entering right now is one of well, student loans are repayable again, which means there'll be a huge boost to the original SoFi business that had disappeared.
• 3:36
  Speaker 1: Secondly, I expect Donald J Trump to give the economy some really nice stimulus through tax cuts and deregulation and everything else.
• 3:44
  Speaker 1: He did very much the same thing in his last term and this one should be bigger because he has a proper mandate to do so.
• 3:50
  Speaker 1: And banking regulation looks like it's going to get pulled back, why the billionaires are going to be running the country right and all of Wall Street's in there, and so they're going to be more banking friendly.
• 4:02
  Speaker 1: So you'll no longer have this SEC and these regulators who hate banks, which is what's been happening the last four years.
• 4:08
  Speaker 1: So all of those things in itself should tell you well, this is a good story.
• 4:12
  Speaker 1: Secondly, then, you would look at well, sorry, a bit bouncy in the car here.
• 4:16
  Speaker 1: I hope you're not making your car sick.
• 4:18
  Speaker 1: The second thing is then well, are interest rates likely to go down or up?
• 4:20
  Speaker 1: Right now, there's a little bit of this pre-Trump three weeks or so where people are thinking, well, what if he causes a tremendous amount of inflation and all of that?
• 4:30
  Speaker 1: Is it likely?
• 4:32
  Speaker 1: Look at the labor market data, look at the credit card delinquency data, all that stuff which is sort of indicating a slowing economy, not a collapsing economy, a slowing economy.
• 4:42
  Speaker 1: All you got to do is put some stimulus on top of that, as in lower taxes and a little bit of the rest of the regulation, and you're likely to see a significant improvement in the US economy, which, paired with two or three more rate cuts, which we're likely to get this year, would again be very, very positive for SOFA.
• 5:00
  Speaker 1: Rate cuts are good for these kinds of companies.
• 5:03
  Speaker 1: Remember, the market has hated anything fintech related.
• 5:06
  Speaker 1: There is an ETF out there it's called FinEx F-I-N-E-X.
• 5:10
  Speaker 1: If you look at that, you see the whole fintech sector and it completely collapsed as interest rates went up and as interest rates are coming down, it's recovering.
• 5:17
  Speaker 1: So it's very much a cyclical play against interest rates.
• 5:20
  Speaker 1: And then you have a management at SoFi who sandbags very, very well.
• 5:29
  Speaker 1: Noto is the king of it, which means he lowers expectations In his forecasts.
• 5:32
  Speaker 1: He assumes a terrible economy, like, really like a horrible recession, and you're not getting that.
• 5:38
  Speaker 1: So therefore, they're very, very likely to keep beating expectations and therefore, what I'd say to you is zoom the heck out if you're a long-term investor, if you're a short-term investor, stuff every couple of weeks, every couple of months, depending on where the wind blows which is a good thing to do, by the way then, first of all, watch the masterclass that I put down below, because it will actually teach you two things how to spot the entry points and, b, how to get out before the going gets tough.
• 6:06
  Speaker 1: There's no point holding onto a stock that's not performing for a year or two, because in that year or two you are missing out on opportunities.
• 6:15
  Speaker 1: Your money could have worked for you better.
• 6:17
  Speaker 1: So will I get out of my so-far position if it drops significantly?
• 6:20
  Speaker 1: Yes, yes, probably.
• 6:22
  Speaker 1: Now we're still up something like 200%, so we're good.
• 6:25
  Speaker 1: But if we drop significantly below our support zones, then, yes, I'll get out, and then I'll get back in when the going gets good again.
• 6:32
  Speaker 1: And that's just the way I kind of trade.
• 6:35
  Speaker 1: Now.
• 6:35
  Speaker 1: You optimize our portfolio and how we make a lot of money.
• 6:37
  Speaker 1: So what you should therefore do Invest in the one thing that's going to make a difference this year 2025.
• 6:44
  Speaker 1: And what is that?
• 6:44
  Speaker 1: It's up here.
• 6:45
  Speaker 1: It's your skill set, it's your knowledge, it's what's between the ears, and the more confident you are in your processes and in your rules as an investor or as a trader, the less you care about the noise and the more you see there's an opportunity.
• 7:00
  Speaker 1: So, when your favorite stock stops 10%, do you look up why, yes, that's a good idea to do.
• 7:05
  Speaker 1: And then you find out that it's an investment bank that no one ever heard of that has been wrong consistently on the stock for years, and then you go I'm going to ignore that and maybe use it as an entry point to actually enlarge the position that's been doing very well for you.
• 7:19
  Speaker 1: I'm not saying you should ever do that, but that's sort of the way I look at it.
• 7:22
  Speaker 1: I hope this is a little bit helpful for you.
• 7:25
  Speaker 1: Now I titled this.
• 7:27
  Speaker 1: I'm sorry.
• 7:28
  Speaker 1: I'm sorry.
• 7:29
  Speaker 1: I am giving you stocks that are making you 200% a year.
• 7:34
  Speaker 1: No, in all seriousness, don't follow people's topics.
• 7:38
  Speaker 1: It's a bad idea.
• 7:39
  Speaker 1: You need to follow people you learn from, learn the rules, write them out yourself, and then you are no longer like ruddering around and stuff happens and going what do I do?
• 7:49
  Speaker 1: What do I do?
• 7:50
  Speaker 1: What do I do?
• 7:50
  Speaker 1: You want to be in a position where you are confident enough in your system and what's going on out there that you know exactly what to do, and then you can be really relaxed, you can be on holiday and you can do whatever you want with your life and make 2025 the year where your money works for you and you no longer worry about money.
• 8:07
  Speaker 1: You no longer work for money, you no longer like fret about the small ups and downs of the market.
• 8:12
  Speaker 1: So that's my goal, you.
• 8:14
  Speaker 1: I hope that's also your goal for yourself.
• 8:16
  Speaker 1: First couple of days of the year are what determines the year.
• 8:19
  Speaker 1: So what are you going to do?
• 8:21
  Speaker 1: You're going to invest in the one thing that matters, which is your skills.
• 8:25
  Speaker 1: So go watch the masterclass Links down below FelixRantzorg.
• 8:28
  Speaker 1: Get free, have a beautiful weekend.
• 8:30
  Speaker 1: I'll be live again come Monday.
• 8:32
  Speaker 1: I'll also run through all