Muddy Waters Accuses SoFi of Enron-Esque Accounting as Stock Falls 15%
Updated
Updated · Forbes · Jun 16
Muddy Waters Accuses SoFi of Enron-Esque Accounting as Stock Falls 15%
1 articles · Updated · Forbes · Jun 16
Summary
A 28-page March report from Muddy Waters said SoFi inflated earnings through a “financial engineering treadmill,” reviving investor concerns that deepened after the company’s April earnings and a 15% share drop.
At the center of the critique is SoFi’s fair-value accounting for personal loans: it uses a 4.6% discount rate on a $20.2 billion book, a level critics say is too low and overstates upfront profit.
Forbes estimated that using a 5.5% discount rate instead would have cut cumulative pretax profit by about $275 million, while SoFi says its assumptions are valid and reviewed by auditors, its board and regulators.
Questions also extend to marketing accounting: SoFi capitalized $177 million of such costs in 2024, a treatment that would have left pretax income 76% lower without it.
The scrutiny lands as Wall Street increasingly views SoFi as a lender rather than a tech platform—lending produced 88% of first-quarter 2026 net revenue, while its technology-services business slowed after losing Chime.