SoFi Takes Flight After Hours

Russian President Vladimir Putin has decided to limit the amount of money that Russian citizens and companies can convert out of the rapidly-declining Russian Ruble — a strategy which looks like Putin is locking himself, and his country’s citizens, in a burning room. 

In this case, the ‘room’ represents the bounds of the Russian economy, which has been sanctioned into oblivion. The ‘fire’ would be the rapid decay of value in the country, which has seen the Ruble fall by over 31% YTD. And, finally, the ‘lock on the door’ is a desperate gamble that Putin will be able to successfully wage an armed conflict and a war of economic independence from the West.

If you ask investors, that’s fairly unlikely to happen. Russians are running to the relative safety of cryptocurrencies. This is because other currencies, especially western ones, aren’t safe for Russia since they could get frozen through western sanctions.

The value of major cryptos has soared, providing some validation to the argument that cryptos could become risk assets in times of geopolitical turbulence. In fact, cryptos are trading more like alternatives than equities and bonds during the Ukraine crisis. 💡

Today alone, the global crypto market cap inched closer to the $2 trillion mark, rising 4.1%. The world’s largest crypto, $BTC.X, has risen +15.5% in the last seven days. It was also joined by $ETH.X (+13%), $LUNA.X (+68%), $AVAX.X (+18%), and others. 

Cryptocurrencies are highly regulated in Russia. However, Ruble-denominated pairs have seen record-setting trading volumes according to The Block and Forkast. This boost in trading volume is due to some exchanges following sanction guidance to suspend Russian accounts in an effort to prevent wealthy individuals, like Russian oligarchs, from running and hiding.

Unfortunately, the entire class of citizens in Russia is seeing their wealth rapidly deteriorate. The country’s stock market was closed for a second consecutive day, but one U.S-based Russia ETF has fallen more than 69% YTD. That loss, paired with the near-collapse of the Ruble, means millions of Russians will suffer because of military action they did not want to be involved in.

For this reason, many are willing to risk moving their wealth into crypto, where it will likely settle into U.S-denominated stablecoins such as the $USDT, $UST, or $DAI. Many of these could avoid Western demands to freeze funds or accounts. Individuals who have no access to such stablecoins will probably buy Bitcoin, Ethereum, and others. 

Despite the optimistic surge in crypto prices, we want to emphasize that this is a particularly sad situation — the promise of decentralized, borderless money might prove a valuable use-case for people in battered nations (as it has historically.) 🙏 However, given the controversial role of crypto in this Russia conflict, it is possible that these inflows will be politicized.

SoFi shares are up 20% after hours after the company reported Q4 earnings. 💸 SoFi beat EPS and revenue consensus estimates and raised FY22 guidance. Here are the numbers:

Adj. revenue: $279.9 million, +54% YoY (vs. $279.3 million estimated)
Adj. earnings per share:  -$0.15 (vs. -$0.17/share estimated)
Forward FY2022 outlook:  Estimating $1.57 billion, +55% YoY

SoFi reported excellent numbers in its new members added as well, with 3.5 million new SoFi members, +87% from the beginning of the year. The company exceeded its target new members by 500,000 and even added 960,000 new products (+51% from Q3.) SoFi’s CEO, Anthony Noto, commented on the company’s road to success throughout 2021:

“First, we continued to drive strong growth through great execution across our three diverse businesses, as we adapted to capitalize on changing macro conditions. Second, the success of our unique Financial Services Productivity Loop 1 (FSPL) strategy accelerated as we scaled our business in 2021 — allowing us to exceed our original 2021 member growth target by 40% and still hit our adjusted EBITDA target. And third, we took a giant step forward in 2021 in achieving our goal of becoming a household brand name by investing in and growing our brand awareness via our SoFi Stadium affiliation, the success of our integrated multi-media campaigns and the virality of the influencers with whom we partnered.”

SoFi closed the day -2.18%, but is up 19.02% after hours. Follow the conversation on Stocktwits’ SoFi stream!