SoFi Technologies(NASDAQ:SOFI) And Uber Technologies(NYSE:UBER) are both disruptive leaders in their respective industries and have seen their stocks skyrocket over the past two years. Both significantly improved their financial results and made profits. And the best part is that even after their recent strong performances, SoFi and Uber have excellent prospects and could generate above-average returns in the long term. Let me explain.
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SoFi Technologies is operating at full capacity. Over the past few years, the company’s revenue and profits have soared as its ecosystem continues to expand. What’s Driving SoFi’s Growth? It offers a large (and growing) pool of services, all on a digital platform, which makes it attractive to many consumers, especially younger ones. Here’s the best part. SoFi has medium- and long-term catalysts that should help drive sales growth even further.
For example, the company announced that it would bring back cryptocurrency trading to the platform (after abandoning this activity about two years ago), an important source of income for some fintech specialists like Block. This aligns exactly with one of SoFi’s main demographics: statistics suggest that younger, higher-income investors are more likely to invest in crypto – this is precisely the demographic SoFi was originally created for. The return of cryptocurrency should help SoFi compete even better with other platforms like Robinhood Markets.
That’s not all SoFi does. The company is also launching international money transfers, another opportunity that should help its customers use its platform even more, rather than routing those transfers (and the fees associated with them) through a competing service. These are all changes that could have a positive impact on SoFi Technologies. And that’s before we mention that the company has 12.6 million members and 18.6 million product customers, which equates to about 1.5 products per member.
Cross-selling additional products to its existing users is another way the company can increase revenue over the next few years. What about the company’s prospects beyond that? SoFi’s appeal to younger generations gives it a significant long-term advantage as they increase their income and wealth and opt for even more of the banking services offered by the company. The company is also expected to launch many other services, as it has always done over the years. All of these factors make SoFi’s long-term prospects attractive, making it one of the top stocks to buy and hold, even after its impressive run in recent years.
Many people doubted Uber. For a time, the company faced consistent net losses and significant regulatory issues. However, the ride-sharing specialist overcame these challenges and became a highly profitable business that continues to generate impressive revenue growth. Uber’s progress also serves another important purpose: deepening its network effect. The growing number of delivery drivers, restaurants and grocery stores on the platform attracts even more customers. Uber ended the second quarter with 180 million active consumers on its platform, up 15% year-over-year.
Yet even Uber’s most mature markets remain underpenetrated, with most accounting for just 10% (or fewer) adults aged 18 and older among Uber’s monthly active consumers. Growing penetration in these existing markets should represent a powerful tailwind, even without any other aspect.
But other factors will also help fuel Uber’s growth, including the fact that members of younger generations (like Gen Z) are less likely than previous generations of the same age to have a driver’s license and drive. Several factors explain this demographic difference. Either way, Uber is well-positioned to benefit. Additionally, Uber has turned even potential challenges, such as the rise of autonomous vehicles, into an advantage by partnering with leaders in this space.
Uber is generating strong financial results, building a strong moat, and offering attractive long-term opportunities. The company looks likely to reward investors over the long term.
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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool ranks and recommends Block and Uber Technologies. The Motley Fool has a disclosure policy.
2 Brilliant Growth Stocks to Buy Now and Hold for the Long Term was originally published by The Motley Fool
