SOFI: Mizuho Reportedly Pushes Back On Muddy Waters Report, Reaffirms ‘Outperform’ Rating

• Mizuho maintained an Outperform rating on SoFi Technologies and set a $38 price target.
• Muddy Waters Research had alleged accounting issues in a $312 million SoFi loan and questioned its credit quality.
• The firm explained that SoFi benchmarks student loans against short-term funding rates appropriate for the portfolio’s duration.

SoFi Technologies Inc. (SOFI) is drawing attention on Wall Street after Mizuho pushed back against a recent short-seller report, while maintaining a bullish outlook on the digital finance company’s long-term prospects. 

Muddy Waters Research has previously alleged questionable accounting tied to a $312 million loan transaction and raised concerns around lending assumptions and credit quality of SoFi. 

Analyst Response To Short Report

According to an Investing.com report, Mizuho reaffirmed its Outperform rating and set a $38 price target on SoFi following criticism from an activist short seller Muddy Waters Research. 

Mizuho countered that SoFi’s public filings and management commentary provide sufficient clarity to address the concerns. The firm pointed to prior disclosures from the company’s finance chief, who characterized the JPMorgan-related loan transaction as a sale of senior secured loans executed at par value. 

According to Mizuho, such a structure would typically require regulatory validation, undermining claims that the deal masked additional liabilities.

SoFi Technologies’ stock traded 1% lower on Tuesday afternoon. On Stocktwits, retail sentiment around the stock changed to ‘neutral’ from ‘bullish’ territory the previous day amid high message volume levels.

Debate Over Lending Metrics

The short report also questioned SoFi’s methodology for valuing student loans, suggesting the company used a discount rate below prevailing Treasury yields. 

Mizuho stated that SoFi instead benchmarks against shorter-term funding rates that align more closely with the duration of its loan portfolio. Similarly, disagreements emerged over personal loan charge-offs, with the short seller estimating a higher figure than the company’s reported numbers. Mizuho noted that management had already provided adjusted figures accounting for late-stage delinquencies.

SOFI stock declined by over 35% year-to-date. 

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