Shares of SoFi Technologies Inc (SOFI) stabilized on Wednesday morning after the company delivered a sharp rebuttal to a short report from Muddy Waters Research. It's the classic Wall Street showdown: a short seller publishes a damning report, and the targeted company fires back with equal force.
SoFi management didn't hold back, characterizing Muddy Waters' claims as showing a "fundamental lack of understanding" of their business. The company also signaled it might "explore potential legal action" against the firm. When a company starts talking about lawyers, you know they're taking the allegations seriously.
The Allegations: A 'Financial Engineering Treadmill'
The conflict began Tuesday when Muddy Waters, led by Carson Block, labeled SoFi a "financial engineering treadmill." That's short-seller speak for "this company's numbers don't add up."
The report made some serious claims: that SoFi's 2025 adjusted EBITDA was inflated by 90%, suggesting the true figure was $103 million rather than the reported $1.05 billion. Muddy Waters also questioned loan charge-off rates and pointed to what it called "Enron-esque" off-balance-sheet structures. When someone invokes Enron in a financial report, they're not making casual conversation.
SoFi's Counterpunch: 'Designed to Deceive Investors'
SoFi didn't just disagree with the analysis—it attacked the motivation behind it. The company claimed the short-seller's report was "designed to deceive investors" and pointed to Muddy Waters' own disclosures that the firm intended to cover short positions immediately after publication.
"They stand to profit from their own misleading report," SoFi added. This is the core of the short-seller debate: Are they exposing real problems, or are they creating temporary panic to make money on the price drop? SoFi is clearly arguing for the latter.
Where the Stock Stands Technically
Let's look at what the charts are saying. SOFI is trading 5% below its 20-day simple moving average and 29.5% below its 100-day SMA, which keeps the intermediate trend pointed down even as the stock tries to find a base.
Here's the interesting part: shares are up 45.36% over the past 12 months, but they're currently positioned closer to their 52-week low of $8.60 than the 52-week high of $32.73. That tells you this has been a volatile ride for investors.
The RSI sits at 31.75, which is in the lower end of neutral territory—not oversold yet, but getting there. Meanwhile, MACD is at -1.0767 versus a signal line of -1.1731.
- Key Resistance: $18.50
- Key Support: $17.00
As for immediate price action: SoFi Technologies shares were up 1.90% at $17.70 during premarket trading on Wednesday, according to market data. That's a small bounce after Tuesday's drama, but the real question is whether investors believe SoFi's defense or Muddy Waters' allegations.
