SoFi has fallen to fairly attractive levels, the lending platform has several positives including solid customer growth improving profitability.
SoFi looks attractive at this price - the short sellers report of high Share Based Compensation inflating EBITDA and dilution are genuine negatives - but they’re disclosed by management just like all other companies. Some of the other claims of under reporting charge-offs are being solidly defended but it still may take time for the market to shake it off, they always do. I believe it is worth buying and accumulating more declines.
SoFi Technologies posted strong Q4 results, on strong loan and customer growth. It issued better than estimated 2026 guidance as well.
It's Q4 adjusted net revenue of $1.01Bn beat the consensus of $982.4M handily and grew 6% sequently from $949.6M in the previous quarter and 35% YoY from $739.1M.
Q4 adjusted EPS of $0.13, beat average analyst estimates $0.12 and increased from $0.11 in Q3 and $0.5 in Q4 2024.
A $1B revenue quarter, 60% EBITDA growth, and growing fee-based revenue are solid positives, which bolster the buy recommendation.
SoFi expects 2026 GAAP EPS of ~$0.60, slightly higher than $0.58 consensus estimates, while adjusted revenue is expected to climb to $4.655B vs. previous consensus of $4.55B consensus. Perhaps this wasn't enough for the markets, hence the muted reaction. It expects an Adjusted EBITDA guidance of ~$1.600B vs. consensus of $1.57B. Again, probably not enough of a beat.
For Q1, SoFi anticipates GAAP EPS of $0.12, in line with consensus; adjusted revenue of $1.04B vs. $1.04B consensus; and adjusted EBITDA of ~$300M vs. estimates of $341M.
SoFi is transitioning to a structurally profitable company in 2026, and 2027, with operating leverage kicking in - high time, it is a $4Bn revenue company, there is no justification for now being unprofitable.
It also got an upgrade from J.P. Morgan to Overweight from Neutral, the 10% stock price decline making it a more attractive entry point, with these words from its analyst.
Momentum in the business is undeniable, as SoFi continues to add new members and deposits at a record pace, while other fintechs report deposit outflows or stagnant member growth, and investments in marketing in ‘25 and 1H26 set the stage for continued premium customer acquisition and engagement for the foreseeable future. Earnings from its nearly $40B loan portfolio and further upside from its tech platform and rapidly expanding financial services offerings merit a premium valuation.
There is the constant need for more capital to increase business - as a Fintech SOFI will always need to have skin in the game, which to me is always a good sign, but it’s usually dilutive leading to lower multiples hurting the stock price. It’s currently priced at 28x earnings growing at 30% (averaging out the next three years) - that may seem stretched in the current environment.
Higher interest rates will also worsen its lending market.
Misstated Charge-Offs: The report claims SoFi's actual personal loan charge-off rate is approximately 6.1%, significantly higher than the 2.89% reported by the company.
Unrecorded Debt: Muddy Waters alleges at least $312 million in apparent unreported borrowings.
Inflated EBITDA: The firm argues that SoFi’s reported EBITDA of $1.05 billion is inflated by roughly **$950 million** through "manipulated" accounting and off-balance-sheet structures.
Management Incentives: It suggests the student loan business and other segments exist primarily to generate "Fair Value" gains to trigger management bonuses rather than for economic value.
SoFi issued a forceful rebuttal the same day, calling the report "factually inaccurate and misleading" and stating that it demonstrates a "fundamental lack of understanding" of their financial statements. They also announced they are exploring legal action against Muddy Waters. Notably, CEO Anthony Noto purchased approximately $500,000 worth of shares (28,900 shares) in the open market immediately following the report as a show of confidence.
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Nebius is executing brilliantly as an integrated neocloud player with tremendous reach, value addition and strong pricing power.
