SoFi Stock Is Falling. Potential Dilution Could Be to Blame.

SoFi CEO Anthony Noto said supercycles in artificial intelligence and cryptocurrency would lend themselves to the company’s growth. (Photograph by Sean M. Haffey/Getty Images)

SoFi Technologies stock reversed course after gaining on the heels of strong second-quarter earnings. Concerns about share dilution might have something to do with it.

The stock ended Tuesday at $22.40, marking a 6.6% gain, after trading as high as 19% during the session. But in Wednesday morning trading, SoFi stock is down 7.3% to $20.77.

After markets closed Tuesday, the fintech announced an underwritten public offering of $1.5 billion of common shares, representing roughly 6% of its current market cap. Hours later, the company clarified that the public offering of 71.9 million common shares would be priced at $20.85 a share.

The offering is expected to close July 31, SoFi said. It plans to use proceeds “for general corporate purposes, including working capital and other business opportunities.”

J.P. Morgan analysts noted Wednesday that the offering “could pressure shares near-term,” alluding to dilution fears. But the analysts introduced a $22 December 2026 price target, up from a former $16 price target for December 2025. “Valuing SOFI is more art than science given the company’s varied and evolving business mix,” J.P. Morgan added, reiterating a Neutral rating on the stock.

It isn’t unusual for shares to slide following the announcement of a public offering. As more shares are issued, each existing share represents a smaller slice of the company, squeezing investors’ stakes.

The news follows a record-breaking second-quarter report for SoFi. The fintech posted earnings and revenue that exceeded Wall Street’s expectations and raised full-year guidance for the second time. Notably, second-quarter revenue rose 44% to $858 million, marking SoFi’s highest growth rate in more than two years.

“We’re just getting started,” CEO Anthony Noto said in an interview with Barron’s on Monday. “We’re ushering in these two big technology supercycles in both AI and cryptocurrency. Those will really give us wind behind our back over the next couple of years as we embark on maintaining these high growth rates.”

Peer stocks traded mixed on Wednesday. Fellow fintechs Upstart Holdings and Affirm Holdings were down slightly, while PayPal Holdings rose 1.1%. Shares closed down nearly 9% Tuesday after PayPal reported second-quarter earnings.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com