Short Sellers Are Targeting SoFi. Should You Panic?

By Brett Schafer – Mar 26, 2026 at 5:00AM ESTKey PointsSoFi stock is down because of a recent short report.The company is growing quickly but may be misrepresenting its financial statements. Shares still trade at a high earnings ratio. The market may be close to all-time highs, but that has not prevented carnage from happening across many sectors. One stock that has recently been hit is SoFi Technologies (SOFI 0.84%). Down close to 50%, the financial technology company keeps growing quickly but was recently targeted by a short seller alleging potentially misleading accounting that would wipe out the company's profitability. Should you panic over this short report on SoFi? Or is the stock a buy now? ExpandNASDAQ: SOFISoFi TechnologiesToday's Change(-0.84%) $-0.14Current Price$16.56Key Data PointsMarket Cap$21BDay's Range$16.52 - $17.3452wk Range$8.60 - $32.73Volume89KAvg Vol63MGross Margin61.06% Short seller allegations First, let's talk about the short report. Muddy Waters, which tries to profit from falling share prices, is a famous short-selling firm that makes bold claims against high-flying companies popular on Wall Street. Sometimes its allegations are right. Sometimes, they are wrong. In this case, Muddy Waters alleges that SoFi is purposefully misstating its financials for its personal lending business, making its loans appear much more profitable than they actually are. The firm claims that SoFi is retaining risk on loans it sells to third parties for fees, reporting a lower loss ratio for delinquent loans than in reality, and funding third parties to buy its packaged debt, a practice known as circular accounting. Today, it is unclear whether these allegations are true, but Muddy Waters is making some bold claims about this fast-growing digital bank. SoFi's management immediately came out and said the report was false and was trying to mislead shareholders. It remains a risk for SoFi until it can prove to the market that each of these allegations is incorrect. Image source: Getty Images. A fast-growing business If you look at SoFi's actual business, it appears to be just fine based on its financial statements. Deposits at its digital bank are growing rapidly, with customers increasing 41% year over year last quarter. Adjusted revenue rose 41% year over year, and the company is now net income positive. The company has achieved significant scale in digital banking and now offers clients a range of financial tools, including high-yield savings accounts, personal loans, and insurance products. It wants to be a one-stop shop for a customer's personal finances. With the stock down from its highs, you might think SoFi is trading at a cheap price-to-earnings (P/E) ratio. It is not. The current P/E is 43, which is high even for a fast-growing banking operation. And this is assuming none of what Muddy Waters is alleging is true. Don't panic about the short report. However, with both these factors in mind, it is probably best to avoid buying the dip on SoFi stock right now.Read NextMar 25, 2026 •By Brett SchaferA Major Short-Seller Just Attacked SoFi. Here's Why the CEO Is Buying Hand Over FistMar 24, 2026 •By Bram BerkowitzSoFi: The Short ThesisMar 24, 2026 •By Kristi WaterworthPrice to Rent Ratios: Should You Rent or Buy?Mar 24, 2026 •By Jennifer SaibilWant $1 Million in Retirement? Invest $10,000 in These 3 Stocks and Wait 20 Years.Mar 23, 2026 •By Neil RozenbaumIs SoFi Stock a Buy?

The Valuation Math Says YesMar 23, 2026 •By Matt Frankel, CFPWhy SoFi's Galileo Platform Could Be a Big Deal for Long-Term InvestorsAbout the AuthorBrett Schafer is a contributing Motley Fool stock market analyst covering consumer goods, financials, technology, and industrials. Brett is a self-taught investor and has hosted the Chit Chat Stocks podcast since 2018. He previously worked as a lab engineer for science laboratories. He holds a bachelor’s degree in mechanical engineering with minors in finance and mathematics from Washington State University. His lab work on Major League Baseball’s juiced ball problem was featured in The Wall Street Journal and other national outlets.TMFBrettSchaferX@CCM_BrettStocks MentionedSoFi TechnologiesNASDAQ: SOFI$16.56(-0.84%)-$0.14*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.