SoFi Stock Is Down 40% From Its Highs — Short Sellers Are Circling and Bulls Are Digging In, Who’s Right?

At the moment, SoFi Technologies is truly perplexing. With $1.02 billion in revenue, up 40% year over year, $174 million in net income, record member growth, and expanding banking, lending, and investment products, the company recently reported a record quarter. The headline figures give the impression that a business is implementing a strategy that is genuinely effective. Nevertheless, the stock is currently trading at about $16, down about 40% so far in 2026 and 50% from its peak in October of last year. People liked it at $32. The market appears extremely erratic at $16. Depending almost entirely on whether you believe a short-selling firm that released a negative report in March, that divergence between fundamentals and price can be either a buying opportunity or a warning sign.

Muddy Waters Research has a long history of focusing on businesses that it thinks are concealing information in their financial reports. Some of its previous decisions have turned out to be correct. Some have been fiercely contested before fading. The company began targeting SoFi in March 2026 and published a report claiming that the company employs financial engineering to inflate its earnings. Here, the details are important. According to Muddy Waters, SoFi’s actual net charge-off rate, or the proportion of loans the company does not anticipate being repaid, is 6.1%, as opposed to the 2.89% that SoFi discloses to the public. Additionally, it claims that SoFi uses an artificially high discount rate to inflate the fair value of loans while disguising debt that ought to be on the balance sheet by recording them as fee income. The stock dropped an additional 10.6% in March alone after the report’s release due to these grave accusations.

SoFi vigorously refuted all of the accusations. Anthony Noto, the company’s CEO since 2018 and a former Goldman Sachs banker and CFO for the NFL, called the report deceptive and acted swiftly. Shortly after the release of Muddy Waters, the company announced a $3.6 billion deal, which appeared to be an indication of operational confidence rather than a company in a panic. The well-known market analyst Jim Cramer stated on air that he had examined the accusations “point by point” and concluded the bulls were correct. He added that he has known Anthony Noto since 1998 and has never had any doubts about his morality. Citing a financial metric is a very different kind of endorsement, and while some investors may find it comforting, others may find it inadequate.

SoFi’s situation is unique because the underlying business is expanding impressively by nearly every conventional measure. In 2025 alone, the company originated personal loans totaling $27.5 billion. SoFi Money, the company’s digital banking platform, offers competitive checking and savings accounts, credit cards, student loans, home loans, insurance, and investment tools—all from the comfort of your phone. Starting with a single product and working its way up, the model is designed to capture a customer’s whole financial life. Although other consumer fintech businesses have tried this approach with differing degrees of success, SoFi has the bank charter it acquired in 2022 to support it, providing it with access to less expensive deposit funding that pure-play fintechs do not. The gross margin is approximately 61%, which is a good percentage for a lending company.

With a beta of 2.30, SOFI moves in both directions about twice as hard as the market. The investor base that has historically owned this stock can be inferred from that number alone: they are growth-oriented, volatility-tolerant, and sensitive to changes in the sentiment surrounding fintech in general. Digital lenders were penalized during the sharp rate increases in 2022 and 2023 as deposit costs increased and worries about credit quality grew. SoFi survived that period and emerged with the bank charter intact, which is no small thing. A different set of pressures are present in the current environment, including the Muddy Waters report that hangs over the stock, general market volatility brought on by geopolitical disruptions, and a general cooling of fintech enthusiasm that has sent many sector names well below their peaks.

It’s difficult to ignore the fact that the discussion surrounding SoFi’s valuation has now almost taken on a philosophical tone. The stock is currently trading at about 42 times trailing earnings, which is more reasonable than the multiples it carried during its peak retail enthusiasm in 2021. Discounted cash flow models yield wildly disparate estimates of the stock’s value based on their assumptions about loan performance. The story lies in the disparity in estimates. SoFi has some important accounting questions to address if Muddy Waters is generally accurate. At $16, SOFI is trading at a substantial discount to its reasonable long-term value if Noto and the company’s own figures are correct. At the same time, both possibilities exist. And how this stock moves for the remainder of 2026 will be determined by that conflict between a company reporting record numbers and a short seller doubting their veracity.