Stock Market Today, March 17: SoFi Technologies Falls After Short Seller Alleges Aggressive Financial Engineering
SoFi Technologies (NASDAQ:SOFI), an online personal finance platform, closed Tuesday at $17.37, down 1.47%. Shares moved lower after a new short-seller report alleged aggressive financial engineering and misstated debt. Investors are watching how SoFi defends its accounting and executes on its Mastercard stablecoin partnership. Trading volume reached 157.5 million shares, coming in about 167% above its three-month average of 59 million shares. SoFi Technologies IPO'd in 2021 and has grown 42% since going public.
How the markets moved today
The S&P 500 added 0.27% to finish Tuesday at 6,717, while the Nasdaq Composite gained 0.47% to close at 22,480. In financial technology, peers LendingClub closed at $14.12, up 1.77%, and Upstart ended at $27.83, up 0.14%, as investors assessed lending and credit trends.
What this means for investors
Well-known short-selling firm Muddy Waters released a short report on SoFi this afternoon, prompting the stock to temporarily sink 6% before rallying most of the way back today. There are several interesting items in the report, but the headliner is that Muddy Waters believes SoFi’s actual personal loan charge-off rate is closer to 6.1% than the 2.9% figure the company states.
The short-selling firm also raised a few questions about SoFi’s balance sheet, its fair-value process for personal loans, and the company’s shareholder “dilution treadmill.” I’m a SoFi shareholder, so this news certainly needs to be monitored, but I’m not panicking over it yet. Investors should give management time to respond to the report and reassess afterward.
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Josh Kohn-Lindquist has positions in SoFi Technologies and Upstart. The Motley Fool has positions in and recommends Upstart. The Motley Fool has a disclosure policy.
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