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“SoFi was hit with a shore report from Muddy Waters on Tuesday. And this is actually one of the more interesting short reports I've seen from Muddy Waters.”
“They're accusing SoFi of something very specific.”
“They don't think this is a company that is going under completely. They just think that some of the gains recently on some of their sales of assets have been overstated.”
“Muddy Waters noted short seller in the past month has put out two reports about SoFi claiming that you're looking at a company that is engaging in financial engineering.”
“suggesting that they've overstated profitability to the tune of $1 billion.”
“they responded just this past weekend saying, 'Look, here's part two. We have 11 questions.'”
“Muddy Waters is calling out several things that I think bulls investors in the stock.”
“Muddy Waters put out a short report on SoFi that raised some serious concerns. It claimed the company may have at least $312 million in debt that hasn't been recorded.”
“It also argued that SoFi's adjusted IBIDA reported at about a billion may be overstated by about $950 million due to several accounting adjustments.”
“Muddywaters Research is an investment firm that is famous for shortselling. It means it takes positions against companies that it believes are overvalued or misleading investors.”
“Then it publishes detailed research reports that can draw a lot of attention and move both sentiment and stock prices. So, it's not unusual for a report like this to create some volatility.”
“Moneywaters argues that the company may be underestimating those loan losses, estimating the real charge off rate closer to 6.1% instead of the 2.8% that was reported.”
“The report also questions the student loan segment. Specifically, it points to a low discount rate that help generate around 247 million in paper gains.”