Mizuho on SoFi Technologies (NASDAQ: SOFI) and Muddy Waters: 'upon further investigation we believe these arguments could likely be refuted'.

The analyst comments "The report suggests that a “$312mn JPM loan sale” wasn’t actually a third-party sale, arguing that it was a refinancing / borrowing. The report further argues that "SOFI also appears to have a material misstatement of at least $312mn of unrecorded debt," noting that "in the process, SOFI appears to have borrowed $312mn that we believe is not reported in its financials." Our take: Our understanding is that this is a sale of a senior loan. For reference, on the 3Q24 call the CFO noted that: "finally, we sold $312 million of senior secured loans at a par execution." We would argue that as a heavily regulated bank like SOFI is, such a statement requires true sale opinion. The criteria for true sale are discussed in greater detail in Note 1 in SOFI’s 10-Ks (2023 and 2024), under the Variable Interest Entities header. SOFI also discusses the sale criteria in both Note 1 and Note 4 in its 10-K, in both cases under the Transfers of Financial Assets header. For example, in Note 1, SOFI identifies the sale criteria and states that transfers that do not qualify for sale accounting are reported as secured borrowings. In Note 4, SOFI again states that it accounts for transfers as either sales or secured borrowings depending on facts and circumstances. In the 3Q24 10-Q itself, SOFI notes that "the Company also sold a secured loan at par during the three and nine months ended September 30, 2024, which had an unpaid principal balance and accrued interest of $312.5 million." The report argues that "In 2025, for student loans SOFI used a discount rate of 3.89%, which was 27 basis points below the 10-year U.S. Treasury yield." Our take: Since the weighted-average life of SOFI's student loans is ~4 years, SOFI is reasonably using 4-year SOFR and not 10-year Treasury as its benchmark rate (see table on page 7, 4Q 2025 earning release). The report argues that it calculates "SOFI’s Personal Loan charge-off rate as really being approximately 6.1%, versus the 2.89% it reports." It argues that "SOFI manipulates the rate by disposing of loans days before the charge-off threshold and by seemingly parking defaulted loans off balance sheet". Our takes: First, we note that management specifically called out 4.4% (vs. 2.89%) of loans excluding $90mn of late-stage delinquent personal loans (see: 4Q 2025 investor presentation, p18). The report also points to a 4.7% annualized charge-off rate (page 9). We see more evidence for 4.4% - in line with management's comments - using the following math: 8.4% Fitch cumulative gross loss from table II-4 in the short report * (1-0.10 recoveries) / 1.8 weighted average life of the loan = ~4.2%."