Our SoFi Price Target After Litigious Response To Enron Accusation

Sportico Invest Los Angeles

Shares of core Sarge-folio holding and key "Stocks Under $10" stock SoFi Technologies (SOFI)  were up on the day. The share price made like a pea rolling off of a table top just before 2 p.m. ET on Tuesday afternoon. It got ugly quickly. 

What happened? Muddy Waters happened. Muddy Waters Research released a "report" that described SOFI as "a financial engineering treadmill, not a healthily growing origination business."

The next sentence was even harsher: 

"SOFI shareholders are 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." 

Mentioning GE Capital and Enron in the same sentence, early in the piece, and comparing those firms (that met with disaster) to SOFI was interesting to say the least, given my obvious bias. 

I just happen to have a large long position in the name and happen to have named SOFI my stock of the year back in late December 2025. I don't know SOFI CEO Anthony Noto, but I know people who know Noto, and my belief that he is a man of honor is part of why I am invested in him. I tend to invest in CEOs as much as I do ideas.

Muddy Waters

The release asserts that SOFI "appears to have a material misstatement of at least $312 million of unrecorded debt. If we are correct, it raises the possibility that there are more extensive misstatements we have not detected." 

Really? 

The release goes on: "We calculate SOFI’s Personal Loan charge-off rate as really being approximately 6.1%, versus the 2.89% it reports."

Then came this gut punch: 

"SOFI’s Student Loan business appears to exist primarily to generate Fair Value gains for management bonuses; not for strategic or economic reasons." 

The release went on to conclude with this: 

"Management effectively gets paid for diluting shareholders. We suspect that failure to engage in any one of the abuses we have identified would have a material impact on management performance bonuses, possibly eliminating them entirely. These abuses, in our view, drive SOFI’s serial equity issuances."

Oh, after the text of the release, which was rather short, but is not of a nature that I can either verify the truth of or prove otherwise, came the "Terms of Use" and some notes. This section is far longer than the actual text, which was, in my admittedly biased opinion, quite clearly written in a way that would catch the attention of keyword-reading trading algorithms.

Within those notes comes the sentence that, for me, provoked my willingness to buy SOFI on weakness and increase my long position. Check this out. This paragraph is beyond amazing:

"As of the time and date of each report, Muddy Waters (defined below) is short the securities of, or derivatives linked to, the securities of the subject issuer (each, a 'Covered Issuer'), unless otherwise stated in the report. Upon the publication of each report, we intend to begin covering a substantial majority of our short positions. Our risk reduction is not a reflection of a lack of conviction in our opinions or the facts presented; rather, it has to do with managing risk in a manner that is prudent for a fiduciary of our investors’ money."

Now, I am no lawyer. I cannot speak to the legality of actions such as this. I do know that writing a report that will certainly provoke a very predictable algorithmic reaction and positioning oneself ahead of that release to profit from said algorithmic reaction raises serious ethical questions. 

The intent to begin covering a substantial majority of that position upon publication as those algos kick in? That's just something far beyond incredible.

SoFi Technologies Responds

The firm, under attack, did not take this report lying down. The response began: 

"The claims made in the Muddy Waters report demonstrate a fundamental lack of understanding of our financial statements and business. We intend to explore potential legal action against Muddy Waters for the factually inaccurate and misleading report they shared about our business today."

SOFI went on:

"Muddy Waters is known for producing reports designed to erode shareholder value solely to allow short sellers to profit from a declined stock price. In fact, their report discloses their intent to begin covering a substantial majority, possibly all, of their short positions immediately upon publication, and therefore they stand to profit from their own misleading report. We have reviewed the full report and believe it is designed to deceive investors."

SOFI closed by reminding investors that: 

"We are a highly regulated public company with financial statements and extensive disclosures prepared in conformity with U.S. GAAP and the rules and regulations of the SEC."

And: 

"Additionally, we are a bank holding company regulated by the Federal Reserve and operate a bank that is regulated by the Office of the Comptroller of the Currency, among other regulators."

On Top of That...

Noto purchased 28,900 shares of SOFI common stock for his own account on Tuesday in response to the Muddy Waters piece for about $500,516. This brings Noto's long position to 11,704,352 shares. I remind readers that Noto just purchased more than $1 million worth of SOFI common stock back on March 1. Does that sound like a CEO who does not believe in his firm or what he is doing? Does that sound like a man of anything other than honor?

The Charts​

This is the chart that I showed readers two-and-a-half weeks ago. ​At that time, I reiterated the idea that I saw potential for downside risk to the 61.8% retracement level of the 2024 into late 2025 rally, which would be close to $16.20. 

I informed readership that my conviction had not wavered and that I would be adding down to that level. The stock bottomed at $16.48 on Tuesday and as readers have known for years, win, lose or draw, my money is always where my mouth (keyboard) is. I step to the plate and look for my pitch. Always have. 

Let's update this chart and zoom in a bit:

Readers will now see the double-top pattern of bearish reversal ​that ultimately led to the 2026 sell-off. Readers will see the early March "death cross" that exacerbated the sell off. Note that the 200-day SMA was rising at the time of that cross, which often eases the severity of any associated algorithmic reaction due to the cross itself.

Now, given the low on Tuesday and the proximity of the early March low, SOFI has the makings of having put in a double-bottom pattern of bullish reversal. Now, we have a number of "pivots" to contend with. Any or all of them could act as either resistance to any recovery or as an accelerant to the upside if the stars align. The first pivot would be the one provided by the double bottom itself at $19.50.

A target based on that pivot alone would be close to $24. Such a target would take SOFI past the 50-day and 200-day SMAs, which would force professional money to flow back into the shares. (I told you that I have an upside bias here.) Therefore, I am going to leave my target price where it is, at $29. 

Do I believe Muddy Waters? Without far more detailed information, how could I? Do I trust Noto? You bet your tail I do.

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At the time of publication, Guilfoyle was long SOFI equity.