Key Points
SoFi Technologies (NASDAQ: SOFI) stock had a pretty strong run before it tanked this year. But all great stocks have their ups and downs; it’s important for investors to ride out the volatility and hold on to great stocks to achieve long-term success.
Part of what’s going on is that Muddy Waters Research released a short-seller report detailing allegations of financial engineering and crooked accounting. When SoFi releases its 2026 first-quarter earnings on April 29, here’s what you should pay attention to.
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Investors already expect strong growth and improving profits. SoFi has been adding new customers at a rapid pace, and it typically beats on both the top and the bottom lines.
In light of the report, investors should note SoFi’s personal charge-off rate. Muddy Waters made several claims, including that SoFi reports an artificially lower personal loan charge-off rate of 2.89%. It calculates the “real” rate at 6.1% and alleges that SoFi takes several actions to make it appear lower, including eliminating bad loans just before the charge-off threshold and keeping defaulted loans off its balance sheet.
Down the line, that produces $259 million in fair value gains on personal loans, or 25% of what it reported as adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2025, a significant inflation. In fact, Muddy Waters claims that the reported 2025 EBITDA is inflated by a total of 90% due to improper accounting practices.
While management denies all of the allegations, investors should pay attention to SoFi’s personal charge-off rate and, more importantly, if there are any resolutions about the report’s claims.
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Jennifer Saibil has positions in SoFi Technologies. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
