10 Worst ARK Stocks To Buy According To Short Sellers

7. SoFi Technologies, Inc. (NASDAQ:SOFI)

Short Interest as % of  Shares Outstanding: 18.08%

Number of Hedge Fund Investors In Q2 2024: 29

Ark Invest’s Q2 2024 Stake: $96.0 million

SoFi Technologies, Inc. (NASDAQ:SOFI) is a California based financial technology company. One of the new age financial companies, the firm offers loans, accounts, and financial management products. A key differentiating factor for SoFi Technologies, Inc. (NASDAQ:SOFI) is that it targets consumers with high credit scores through its products. This means that its customers are generally well off individuals that are likely to pay back their loans, and it removes an element of risk from its business model that is typically present in financial firms. Being a smaller company allows SoFi Technologies, Inc. (NASDAQ:SOFI) to aggressively target growth, and for 2024, the firm expects to grow its members to 2.3 million or by 30%. The market places a premium on growth for firms like SoFi Technologies, Inc. (NASDAQ:SOFI), and other tenets of its hypothesis include lower interest rates that could spur further borrowing by its customers.

SoFi Technologies, Inc. (NASDAQ:SOFI)’s management shared key figures for its loan portfolio during the Q2 2024 earnings call:

“In terms of non-interest income, Q2 originations grew 22% year-over-year to $5.3 billion and were driven by a record quarter in personal loan originations, which grew 12% year-over-year and 28% sequentially to $4.2 billion. Our student loans business saw origination volume grow 86% year-over-year with a slight 2% decline sequentially to $737 million. Home loans grew by 71% year-over-year and 24% sequentially to $417 million. Our personal loan borrowers’ weighted average income is $168,000 with a weighted average FICO score of 747. Our student loan borrowers’ weighted average income is $137,000 with a weighted average FICO score of 764.

In the second quarter, we sold portions of our personal loan and home loan portfolios totaling nearly $1.6 billion. In terms of the personal loan sales, we closed $1.1 billion of principal at a blended execution of 106.2%. These sales had similar structures to other recent personal loan sales with cash proceeds in line with par or at a small premium to par with the majority of the execution premium consisting of a contractual servicing fee that is capitalized. These deals included a small loss share provision that is above our base assumption of losses and immaterial relative to the exposure we would otherwise have if we held the loans. Our $381 million of home loan sales were sold at a blended execution of 101.9%. Additionally, we sold $69 million of late-stage delinquent personal loans in the quarter.”