SoFi Technologies (NASDAQ:SOFI), Inc. CEO Anthony Noto has entered into a prepaid variable forward contract with a third-party dealer, a move that will see him receive an upfront cash payment of $22.4 million. The contract, which pertains to 2 million shares of SoFi's common stock - currently trading at $16.88 with a market capitalization of $18.32 billion - was disclosed in a regulatory filing with the Securities and Exchange Commission on Tuesday. According to InvestingPro data, SoFi's stock has shown remarkable momentum, delivering an 80% return over the past year.
Under the terms of the contract, Noto has the option to settle the agreement either by delivering a portion of the shares or by making a cash payment when the contract matures on February 7, 2028. The number of shares to be delivered will depend on the stock's price at that time, with a floor price set at $13.06 and a cap price at $30.74 per share.
With the stock currently trading near its 52-week high of $17.04, InvestingPro analysis suggests the company may be overvalued at current levels, though it maintains strong growth with revenue increasing by 32% year-over-year.
The contract represents approximately 10% of the shares Noto beneficially owns and less than 1% of the company's total outstanding shares. During the term of the pledge, Noto retains all voting, dividend, and other rights in the pledged shares.
The CEO's decision to enter into the contract is said to offer liquidity while maintaining his stake in the company. For deeper insights into SoFi's valuation metrics and 14 additional ProTips, investors can access the comprehensive Pro Research Report available on InvestingPro.
Noto, who has led the finance services company since early 2018, has not sold any company stock since joining SoFi. Instead, he has increased his holdings by purchasing over 2.7 million shares on the open market over the past three years.
The transaction is noteworthy as it involves a significant number of shares and a high-profile executive of a publicly traded company. It also demonstrates a financial strategy that allows executives to monetize their equity holdings without immediately surrendering ownership.
This report is based on a press release statement and provides information about the recent financial dealings of SoFi Technologies, Inc.'s CEO.
In other recent news, SoFi Technologies has been experiencing significant developments. The financial services company reported robust growth in its Q3 2024 earnings call, with adjusted net revenue hitting $689 million, a 30% increase from the previous year. The financial services segment doubled its revenue to $238 million, and the tech platform saw a 14% rise to nearly $103 million. The lending segment also performed strongly, with $6.3 billion in loan volume.
Meanwhile, BofA Securities downgraded SoFi from Neutral to Underperform due to concerns about the company's valuation. Despite SoFi's strong performance and positive third-quarter results, BofA Securities suggests that the current valuation may be overly optimistic. This follows a significant increase in SoFi's shares of over 60% year to date.
In addition, Silver Lake Technology Associates IV, L.P. and related entities sold approximately 31.2 million shares of SoFi. This series of transactions resulted in a reduction of Silver Lake's ownership stake in the company. On the other hand, Mizuho (NYSE:MFG) Securities maintained its positive stance on SoFi, increasing the firm's price target on the company's stock to $16.00, up from the previous $14.00. The decision to raise the price target is primarily attributed to the higher market multiples observed in the sector.
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