SoFi shares opened 20% up on Wednesday: this is why

SoFi Technologies Inc (NASDAQ: SOFI) secured regulatory approval on Wednesday to become a bank holding company, resulting in a close to 20% increase in the stock price this morning.

SoFi to acquire Golden Pacific Bancorp

SoFi had proposed to buy Golden Pacific Bancorp Inc in March 2021 to become a national bank. The proposition received approval from the U.S. Federal Reserve and Office of the Comptroller of the Currency (OCC), the California-based company said in a press release today.

The Nasdaq-listed firm expects the transaction to complete in February, subject to remaining customary closing conditions. CEO Anthony Noto said:

SoFi’s earnings will benefit from the acquisition

Mizuho’s Dan Dolev expects the acquisition to be accretive to SoFi Technologies’ earnings. The deal, he wrote in a note on Wednesday, will lower funding costs to result in up to $300 million in incremental adjusted EBITDA for the personal finance company.

Dolev, however, slashed his price target on the stock to $17 from $30. Including the price action on Wednesday, SoFi Technologies is still down about 40% from its high of $23 a share on November 4^th.