SoFi is soaring in popularity on Reddit as retail investors look for opportunities in the fintech company following its merger with a Chamath Palihapitiya-backed SPAC

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SoFi is soaring in popularity on Reddit as retail investors look for opportunities in the fintech company following its merger with a Chamath Palihapitiya-backed SPAC
Chamath Palihapitiya. Brian Ach/Getty Images for TechCrunch Brian Ach/Getty Images for TechCrunch
  • Chamath Palihapitiya-backed SoFi Technologies is gaining steam among Redditors.
  • Comments about the company, which went public last month, surged on Reddit this week.
  • Retail traders noted the end of the post-merger lockup period and the high short interest.

SoFi Technologies is quickly gaining traction among retail investors.

The fintech company that went public via a Chamath Palihapitiya-backed SPAC last month has seen an influx of retail flows in the last week, according to data from Vanda Research.

SoFi is soaring in popularity on Reddit as retail investors look for opportunities in the fintech company following its merger with a Chamath Palihapitiya-backed SPAC
VandaTrack, Bloomberg

In a note, Vanda analyst Giacomo Pierantoni and senior strategist Ben Onatibia said the stock is one that "looks increasingly likely to capture some notoriety" as comments about the company accounted for 20% of activity on Reddit's Wall Street Bets forum in the last day.

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The analysts noted the end of the post-merger lockup period and the rise in short interest as "the two main arguments to buy the stock" among retail traders.

One Redditor, who received 500 upvotes, said in a post that the end of the lockup period Monday would give retail traders an opportunity to buy into the stock. Shares dropped 2% Tuesday, and Wednesday they rose 2.1% at 8:40 a.m. in New York.

Another Redditor, who received 1,600 upvotes, posted a bullish view on the company, saying it has a lot of potential.

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"The moment I heard SOFI was going public was the moment I dropped a lot of money into it, used the app for a long time and they're going to be dominating the FinTech sector," the Redditor said.

Redditors, who have become known to invest in heavily shorted companies, also noted SoFi's high short interest rate. According to Fintel.io, the company has a short-volume ratio of 21%.

Travis Rehl, the founder of Reddit investing-tracker HypeEquity, said in a morning note that many retail investors looking to hold SoFi long-term are comparing it to the next Square or PayPal. Among other financial services, the company has a trading platform called SoFi Invest.

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The platform recently announced it would allow users to get in on the initial public offerings of four Palihapitiya-backed blank-check companies. Self-proclaimed "SPAC king" Palihapitiya is a favorite among retail investors, as other companies backed by him, including Clover Health and Virgin Galactic, have become meme stocks.

Read more: These 5 stocks have definite potential for a meme-driven short-squeeze this week, according to Fintel. One of them is even stealing the AMC and GameStop spotlight with its celebrity SPAC status.

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