SoFi Technologies Inc (NASDAQ:SOFI) shares are trading lower on Tuesday afternoon following a scathing report from Muddy Waters Research, which characterizes the company as a “financial engineering treadmill.”

Here’s what investors need to know.

SoFi Faces Allegations of Inflated 2025 Adjusted EBITDA

Benzinga has reached out to SoFi for comment regarding the allegations, which claim the company’s reported 2025 Adjusted EBITDA of $1,054 million is inflated by approximately 90%, suggesting a truer figure of just $103 million.

The short-seller alleges that SoFi shareholders are being incessantly diluted so management can hit bonus targets through “GE Capital-style” loan marks and “Enron-esque” off-balance-sheet structures that disguise borrowings as revenue.

Report Questions SoFi’s Personal Loan Charge-Off Rate

A central claim of the report is that SoFi’s actual personal loan charge-off rate is approximately 6.1%, more than double the 2.89% it reports to the market. Muddy Waters asserts that SoFi manipulates this rate by disposing of loans just before they reach the charge-off threshold and by “parking” defaulted loans in unconsolidated entities.

Alleged Unreported Borrowings and Secured Loan Concerns

Furthermore, the report identifies at least $312 million in apparent unreported borrowings from JPMorgan Chase and alleges that SoFi’s Secured Loan business is actually a subsidized, seller-financed program designed to manufacture market validation for inflated fair value marks.

The firm also contends that SoFi capitalized $194 million in marketing expenses in 2025 to bypass the income statement and protect management compensation metrics.

SOFI Shares Edge Lower Tuesday

SOFI Price Action: SoFi Technologies shares closed down 1.47% at $17.37 on Tuesday, according to Benzinga Pro data.

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