- Block said the AI narrative positions SoFi as “ground zero” for disruption in personal finance.
- According to Block, SoFi’s “superpower” may lie less in innovation and more in its accounting practices.
- SoFi had rejected Muddy Waters’ claims, calling the report a “fundamental lack of understanding” of its finances and operations.
Carson Block, CEO of Muddy Waters Research, on Monday, raised fresh concerns about SoFi Technologies' (SOFI) loan accounting, while warning that AI-driven job losses could hit its core borrower base.
In an interview with CNBC, Block raised questions about the company’s potential financial and structural risks.
AI Risk: ‘Ground Zero’ For Borrower Disruption
Block warns that SoFi’s primary customer demographic, high earners who are not yet wealthy, or “HENRYs”, faces potential displacement by AI. He estimates that AI could replace up to 15% of knowledge workers in the near term, a trend that would directly affect SoFi’s borrowers and their ability to repay loans. This positions SoFi as “ground zero” for AI-related disruption in personal finance.
“When you are going to have businesses that are able to significantly underprice their competitors its going to force everybody to adopt. SoFi is probably ground zero for this disruption because so many of its customers fit that high-earning not rich yet, demographic that’s going to be nailed by AI displacement.”-Carson Block, CEO, Muddy Waters Research
SoFi Technologies' stock traded over 2% higher on Monday morning.
Under Scrutiny: Financial Engineering Allegations
According to Block, SoFi’s “superpower” may lie less in innovation and more in its accounting practices. Block pointed to instances where borrowed funds are reported as loan sales, including a highlighted transaction involving $312 million.
The short-seller report had identified irregularities in SoFi’s loan charge-offs. Muddy Waters alleges that loans are sold just before they would be officially charged off, keeping reported charge-off rates artificially low at around 4%.
SoFi has pushed back against Muddy Waters’ claims, saying the report demonstrates “a fundamental lack of understanding” of its financial disclosures and operations.
The company added that its accounts comply with U.S. GAAP and SEC standards, are backed by established internal controls, and said it is considering legal options in response to what it called a “factually inaccurate and misleading report.”
How Did Stocktwits Users React?
However, on Stocktwits, retail sentiment around SoFi remained in ‘bullish’ territory amid ‘high’ message volume levels.
A Stocktwits user expressed confidence in the company’s CEO, Anthony Noto.
SOFI stock has declined by over 33% year-to-date.
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