SoFi Technologies: Priced for Problems That Aren't in the Filings

$SOFI is down ~40.8% YTD and currently sat around $16.13, in Q1 2026 the business posted record revenue of $1.1B, +43% YoY. Net income more than doubled to $167M, loan originations hit a record $12.18B and members grew 35% to 14.7 million.

The stock fell 13% after earning day because management kept full year guidance unchanged.

Since then two more things have weighed on the stock. A short seller (Muddy Waters) called the accounting fraudulent in back March, then in early June a law firm opened a formal securities investigation tied to those same claims.

The CEO has bought 39 times in five years and never sold once, he bought the day the Muddy Waters report came out and he is still holding 11.9M shares worth ~$191M at current prices.

What SoFi Actually Does

SoFi started as a student loan refinancer, it is now a federally chartered digital bank with a financial services marketplace and a banking-as-a-service tech platform.

SoFi Bank takes deposits and makes loans: Personal loans, student loans, home loans, credit cards. $40.2B in deposits as of Q1 2026, +$2.7B in a single quarter.

The financial services business sits on top of the bank with members getting a checking account, savings account, brokerage account, credit card, and insurance products through one app. The more products a member uses, the cheaper it becomes to serve them. Cross-buy, the percentage of members using more than one product, reached 43% in Q1. This is the most important metric in the business, measuring how embedded SoFi has become in its members' financial lives.

The technology platform (Galileo), is the infrastructure that powers other fintechs and banks with Chime, Robinhood, and dozens of other financial apps running on it.

These three businesses compound off each other, new members come for one product and adopt others, more adoption generates better data, better data improves underwriting, better underwriting enables cheaper credit and cheaper credit attracts more members.

The Q1 2026 Numbers

Per the Q1 2026 10-Q filed April 29th: Revenue $1.1B (+43% YoY), net income $167M (+134% YoY), adjusted EBITDA $340M at a 31% margin, Loan originations a record $12.18B (+68% YoY), members 14.7M (+35% YoY), total products 22.2M (+38% YoY) deposits $40.2B and total assets $53.7B.

The lending segment shows the real growth, with net interest income +39% YoY, driven by average loan balance growth of 40%. This segment's profit of $382.4M was +60% YoY at a 61% contribution margin.

Management kept FY2026 guidance unchanged at $4.655B in adjusted net revenue, $1.6B in adjusted EBITDA, and $825M in adjusted net income. The market interpreted that as a disappointment after a record quarter, a business growing at 43% with unchanged guidance implies management is being conservative.

The balance sheet is clean, total debt $1.81B and cash $3.4B, the business is funded primarily by deposits rather than wholesale borrowing.

The Rate Tailwind

SoFi earns more when interest rates are higher, the bank charges interest on loans and pays interest on deposits. The spread between those two rates drives the core profit in the banking business.

For most of 2025 and in to early 2026 the market was pricing in Fed rate cuts. Fed Chair Warsh has since made clear cuts are not coming and has left the door open to rises. The same macro environment that is a tailwind for Schwab is a tailwind for SoFi's lending book.

New Products Since Q1

SoFi launched two new products in May 2026.

SoFi Coach: An AI-powered financial assistant integrated directly into the app. It helps members manage budgets, understand their financial position, and get personalised guidance. The focus is daily engagement with the aim to increase cross-buy rates and deepen the platform moat.

SoFiUSD: SoFi became the first federally chartered US national bank to issue a stablecoin on a banking platform allowing users can buy, hold, and earn yield on a dollar-pegged digital asset directly through the app. The federal charter is the key difference, every other major stablecoin (Tether, USDC, etc.), is issued by non-bank entities. This gives SoFiUSD regulatory legitimacy competitors cannot match.

Additionally, small business banking and a new cloud-based core for SoFi Money are both in the pipeline, with neither included in guidance or analyst models.

The Short Seller Report and the Legal Investigation

On March 17th Muddy Waters Research published a report alleging at least $312M in unrecorded debt and compared SoFi's accounting to Enron. The CEO responded by buying shares in the open market that same day.

The Q1 2026 10-Q contradicts the core allegations. Total debt is $1.81B, all on the balance sheet and fully disclosed. The variable interest entity structures the report described as hidden are actually fully disclosed in Note 6. Both the CEO and CFO signed certifications confirming the financial statements are accurate, with personal criminal liability attached if the statements are false.

Earlier this month, a securities law firm (Block and Leviton), opened a formal investigation into potential securities law violations connected to the Muddy Waters allegations. To be clear, a securities investigation is not a finding of wrongdoing. Law firms open these routinely after large share price drops, partly to determine whether shareholders have a legal claim. The investigation does not confirm the allegations, but it does extend the headline overhang and keeps institutional buyers on the sidelines until it resolves.

Two months after Enron-level accounting allegations, no SEC or FINRA inquiry has been disclosed in any regulatory filing. SoFi is legally required to disclose a material regulatory investigation, nothing has been disclosed to date.

The Insider Picture

Anthony Noto has been CEO of SoFi since 2018, over the past five years he has made 39 transactions in SOFI stock all purchases and zero sales.

This spring he bought four times: March 2nd at $17.88, March 17th at $17.32 (the day the Muddy Waters report was published), May 8th at $15.73 and May 11th at $16.00.

He is buying lower each time, currently holding 11,946,619 shares worth ~$191M at current prices.

One other insider transaction to note: Jeremy Rishel (CTO) filed an 'Intent to Sell' form in March for 161K shares at approximately $17.62. This is a planned sale at a price above where the stock currently trades. It is worth noting to provide both sides of the coin, but it does not change the picture materially given the scale of Noto's position and his consistent buying.

The Risks

The Block and Leviton investigation is the primary risk. Not because the 10-Q supports the allegations, but the investigation itself creates negative headlines that makes institutional buyers wary and extends the valuation discount. The question is not will it close, but when.

The guidance non-raise is the legitimate business concern, $4.655B full year guidance unchanged after a record Q1 implies deceleration in H2 2026. Either management is being conservative and will raise in Q2, or something in Q3 and Q4 is less certain than the Q1 numbers show.

The tech platform segment lost its largest client at year end 2025, SoFi has not publicly named the customer, describing the deconversion as planned rather than a surprise. Revenue fell to $75M in Q1 as a result. Galileo added 13 new clients in Q1 and has a partnership with one of the three largest US telecoms launching later in 2026.

Credit risk is always present for any lender. The personal loan charge-off rate is 2.89% using CECL methodology, which is the current mandatory standard for all US banks including JPMorgan and Bank of America. If consumer credit deteriorates materially in a slowing economy, loan portfolio fair values fall and margins compress.

The 10-Q also highlights that SoFiUSD's on-chain transaction structure creates compliance complexity, specifically mentioning money laundering and sanctions screening. Once SoFiUSD is transferred on-chain, SoFi may have limited visibility into subsequent holders.

Finally, the December 2025 equity offering at $27.50 per share diluted existing shareholders.

My View

At $16.13 SoFi trades at 26x forward earnings, their own trailing PE has averaged 39x over the past three years, the current 26x is 33% below its own historical average on a business growing faster than at any point in that period. Robinhood ($HOOD), a direct competitor for the same retail financial services customer, trades at 40-44x forward earnings despite lower revenue growth and without a federal banking charter or a lending book. The market is pricing SoFi at a significant discount to both its own history and its nearest competitor.

The valuation discount has one explanation: the Block and Leviton investigation keeps institutional buyers on the sidelines. When it closes, and it will close, that discount compresses.

My current position is 1,140 shares at $16.86 average. 18 consecutive quarters above the Rule of 40, the first federally chartered bank stablecoin in history, record revenue growing at 43% YoY, and a CEO who has bought the stock 39 times in five years and never sold. The legal overhang is the only thing standing between current prices and a re-rating.

Q2 2026 earnings are expected around July 28-29th (to be confirmed), if guidance is raised the re-rating happens immediately. If charge-off rates hold and the technology platform shows recovery from the large client departure, the thesis gets stronger.

Ticker Thoughts is independent analysis. Current position: 1,140 shares at $16.86 average. All open and closed positions are detailed on the positions page.