Market

Why Shares of the Company Taking SoFi Public Are Rising Today | The Motley Fool

What happened

Shares of Chamath Palihapitiya’s blank check company, Social Capital Hedosophia Holdings V (NYSE:IPOE), rose as much as 11% at one point today on news that it could complete its merger with the online lender SoFi as soon as May 28. SoFi could start trading on the Nasdaq under its own ticker, “SOFI,” as soon as June 1.

So what

Social Capital Hedosophia Holdings V is one of several special purpose acquisition companies (SPACs) that Palihapitiya has launched. SPACs are essentially shell companies that raise capital with the intention of merging with a private company and taking them public.

Investors have generally looked favorably at SoFi and its wide offering of financial services, which include personal loans, student loans, and mortgages, as well as checking accounts, credit cards, an online brokerage, and more.

Image source: Getty Images.

But ties to Palihapitiya seem to have hurt its share price, especially after a report in February accused Palihapitiya of misleading investors on a different SPAC.SPACs in general have also struggled following new guidance from the Securities and Exchange Commission.

Now what

Shares of IPOE gave up some of their gains but still traded more than 8% higher in the final hour of trading.

Many investors including myself see a great company in SoFi, which is already growing members rapidly and selling multiple products to its members, which increases profitability per member and reduces customer acquisition costs.

I believe the company’s stock price will perform much better once it starts trading on its own and is not so closely associated with SPACs or Palihapitiya.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.



Most Related Links :
reporterwings Governmental News Finance News

Source link

Back to top button