The Los Angeles Rams may not have been the only winners on Super Bowl Sunday.
SoFi Technologies, which owns the naming rights for the Southern California stadium where the game was played, could get a membership boost from having its name plastered across millions of television sets, said Michael Perito, an analyst who covers SoFi for Keefe, Bruyette & Woods.
“It’s reasonable to assume the Super Bowl could provide a lift in the first quarter to member growth,” Perito said.
SoFi is paying around $600 million in fees over 20 years for the stadium sponsorship and naming rights, according to recent regulatory filings. Analysts are watching for any payoff in the form of new customers, or what SoFi calls members, for its digital banking services.
SoFi reports its fourth quarter earnings on March 1. Any customer acquisition boost from the Super Bowl is more likely to show up in the company’s first-quarter results.
The San Francisco company says the stadium deal has already been paying off.
Nationally televised NFL games at SoFi Stadium averaged 20 million viewers, which is more than the 15 million TV viewers the company had previously reached in an entire year through all of its sports sponsorships, SoFi CEO Anthony Noto said during a Nov. 10 call with analysts.
“When our TV ads run during SoFi Stadium NFL games, we consistently see a significant uptick in brand awareness, member and product growth, and SoFi app downloads,” Noto said.
Noto is a onetime NFL chief financial officer who joined SoFi from Twitter in 2018. The following year, SoFi struck the deal for the Inglewood, California, stadium’s naming rights.
Television ratings for Super Bowl LVI were not available at press time, but each of the previous five Super Bowls scored between 91 million and 111 million viewers.
SoFi is entering its second decade since launching as a fintech startup that specialized student loan refinancing. Since its early days, the company, which is now publicly traded, has added other consumer loans, investment products and transaction accounts.
Earlier this month, SoFi announced the closing of its $22.3 million acquisition of Golden Pacific Bancorp, which is expected to provide a cheaper funding stream through bank deposits. SoFi got an estimated $750 million in deposits from the purchase.
SoFi has recently been one of the more shorted stocks, as investors have bet on traditional banks catching up to fintechs, and as the government stimulus programs that fed a pandemic-era boom in new digital accounts have been expiring.
Throw in the potential for rising funding costs as a result of higher interest rates, and up to 17% of SoFi’s stock had been sold short to start the year, according to some estimates.
SoFi stock is down 22% from the start of the year. Since slipping below $12 a share at the end of January, the stock price has climbed by about 10%.
Even before the Super Bowl, SoFi’s member base was growing at a rapid clip. A 14.7% increase in memberships during the third quarter of 2021 represented the second largest quarterly increase in the company’s history.
Analysts at Jefferies recently estimated that SoFi could report total membership of more than 3.2 million during the fourth quarter, which would represent about a 10% increase over the previous three months and 74% growth over the past year.
“We believe it is imperative for SoFi to continue to exhibit strong new customer acquisition and increased products per customer, and we look to the quarter to observe the continuation of these trends,” the Jefferies analysts said in their report.
On Feb. 9, SoFI announced a new marketing campaign, “Break Up With Bad Banking,” in an effort to further boost its customer acquisition growth.
Whether the SoFi Stadium deal will eventually yield higher profits — or merely more revenue — remains an open question.
During the third quarter, SoFi reported a net loss of $30.0 million, down from a $42.9 million loss in the same period a year earlier. Adjusted earnings before interest, taxes, depreciation and amortization totaled $10.3 million in the third quarter, down from $33.5 million in the third quarter of 2020.
Total net revenue climbed to $272.0 million in the third quarter, up from $200.8 million a year earlier.
During the Super Bowl broadcast on NBC, the SoFi name was frequently mentioned by the announcers and captured by the cameras. On social media, the company promoted its new advertising slogan along with the hashtag #MoveOnWithSoFi, while promising that it will soon start offering an annual percentage yield of up to 1.00% on its SoFi Money account. New members without direct deposit will earn about 0.25%.
Perito, the KBW analyst, said that the bank charter will also yield significant benefits.
He predicted that SoFi will eventually be paying about 0.80% and 0.90% to fund its deposits, which will finance its bread-and-butter loans to customers. That’s well below the 3.1% that SoFi was paying on warehouse lines from big banks, Perito estimates.
“Bringing a bank charter on will provide immediate enhancements to how SoFi funds itself,” he said.
