SoFi’s 38% YTD Drop Hides a Deeper Worry: Its Loan Pools Are Softening

SoFi’s loan pools are showing signs of softening — and that’s what’s really unsettling analysts. The 38% year-to-date drop in SoFi Technologies’ (SOFI) stock reflects more than macro jitters or valuation debates. It points to a narrowing confidence in the performance of its securitized loans, the foundation of its lending business. Keefe Bruyette analyst Tim Switzer, reiterating his Underperform rating, trimmed his price target to $17 and flagged investor concerns over deteriorating securitization performance. Early signals, he said, are “leaning negative.”

That unease compounds other pressures. Muddy Waters recently attacked SoFi, calling it a “financial engineering treadmill” and alleging accounting practices that inflated its books — demanding a restatement of more than $312 million in loans. While SoFi rolled out Big Business Banking on April 2, aiming to expand into 24/7 fiat and crypto services for enterprises, the launch failed to shift investor sentiment. Switzer also anticipates earnings pressure in Q1 from changes in how SoFi marks certain balance sheet assets.

Wells Fargo’s Donald Fandetti, while maintaining an Equal Weight rating, lowered his target to $18, citing another structural concern: AI-driven job displacement. If automation erodes job security, SoFi’s core customer base — younger, often credit-thin borrowers — may face greater repayment risk. On Wall Street, the consensus remains Hold, backed by five Buys, eight Holds, and three Sells. Yet the average price target of $23.88 implies 46% upside, revealing a split between current caution and long-term optimism. The gap hinges on whether SoFi’s loan quality holds. For now, the data leans the other way.