SoFi's $750M Capital Raise is a Buying Opportunity

Plus updates on Palantir's new $178M Army contract, our latest startup report, and the latest (out)performance of the BLI Premium Portfolio.

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The broader indexes just posted their worst week since October, with the Nasdaq Composite down nearly 1% on Friday alone as investors grappled with interpreting the dichotomy between a stronger-than-expected jobs report and a slight uptick in unemployment rates.

I’m reminded of my old colleague Morgan Housel’s sad (but true) "honest stock market update” several years ago. (grin)

As for me? I’m keeping my head down — as per usual — and focusing on the individual states of the dozens of companies that make up my watchlist and portfolio.

To that end…

SoFi: Down 15% despite its (brilliant) $750M+ capital raise

SoFi Technologies tumbled nearly 15% this week after the banking and fintech leader priced a mammoth private offering of 1.25% convertible senior notes due 2029 in a principal amount of $750 million (with options for the initial purchasers to buy up to another $112.5 million).

SoFi also revealed that, earlier this month, it also entered into agreements with holders of around $600 million of convertible notes due in 2026 to swap that debt for around 61 million common shares.

That’s a massive sum any way you slice it considering SoFi’s $7.5 billion market cap as of this writing. Shares unsurprisingly plunged this week as the market recoiled over the potential dilution.

So why do I think this fat capital raise is a good thing for SoFi?

For one, SoFi says it will use the bulk of the proceeds (up to $845M) to redeem Preferred Stock yielding 12.5% — before the yield on that stock rises to 17.5% in the coming months — as well as potentially repaying other higher-cost debt in the process.

At least one Wall Street analyst has already chimed in to echo my sentiment that the market got it wrong; Mizuho’s Dan Dolev estimates the equity exchange agreement alone should boost SoFi’s tangible per-share book value by 10% while improving capital ratios by more than 200 basis points without meaningfully diluting per-share earnings.

What’s more, the new 2029 convertible notes should save the company more than $60 million per year in interest.

Put simply, SoFi is playing chess while the rest of the market is fumbling its checkers pieces. This is a buying opportunity if I’ve ever seen one.

Palantir: Up 7% on a New Army Contract

Meanwhile, Palantir rallied 7% this week after the AI analytics software platform provider announced a new $178 million prime contract with the U.S. Army for the development and delivery of (and the Army loves its acronyms) the Tactical Intelligence Targeting Access Node (TITAN) ground station system.

The TITAN system will represent the Army’s next-gen deep-sensing capability enabled by AI and machine learning as it pertains to providing “actionable targeting information for enhanced mission command and long range precision fires.”

This is especially interesting to me as someone who spent multiple years after college as a software engineer developing AI-based software centered around precision munitions and the identification of unexploded ordnance.

But it’s also merely the latest step for Palantir, which is capitalizing on this contract as the latest progression of the Army’s efforts to leverage non-traditional defense contractors in its quest for platform modernization.

Assuming Palantir can continue to win large government contracts while simultaneously growing its commercial revenue streams — the latter of which helped drive its monster quarterly update last month — I see no reason the stock won’t continue to outperform for the foreseeable future.

🗞ICYMI: New Startup Report - Coco Coders

In case you missed it, last week I had a fantastic meeting with Elizabeth Tweedale, the founding CEO of coding education platform Coco Coders.

Coding education is near and dear to my heart as a former software engineer, and it’s apparent to me that Coco Coders is building a cash-generating machine that happens to address our current education system’s painful lack of attention as it pertains to tech literacy among today’s youth.

📝 BLI Portfolio Performance Update: +8.6%

  • BLI Premium performance update: As of this writing, the BLI Premium Portfolio is up 8.6%, beating the S&P 500 by 1.43% since launch.

  • BLI Premium Members can track and view the portfolio at any time here.

  • I’m continuing my active collaboration with our friends at to make significant improvements to the display and usability of our interactive portfolio tool. Stay tuned for more updates in the coming weeks!

BLI Premium Portfolio returns as of March 8, 2024

This AI Startup Investment is Winning

Otherweb is the fastest-growing AI platform on the internet. They have developed technology that transforms a $565 billion market.

Investors are taking notice, and here’s why: 

1) They raised $1.9M+ from 2,000+ investors, including founders with $100M+ exits, VCs, angels, executives from Google and Amazon, and more.

2) They grew to over 8 million users in just 15 months. 

3) They are riding a $15.7 trillion wave of AI innovation.