SoFi Stock Plunged After a Surprise Capital Raise: Should You Buy the Dip?

SoFi (SOFI) stock fell more than 6% on Friday, Dec. 5, after the company announced a $1.5 billion capital raise the previous day. The move was unexpected, as SoFi doesn't appear to be in any real need of cash, given its regulatory capital requirements. SoFi has also been diversifying into a capital-light business, and in the third quarter, 56% of its revenue came from its Financial Services and Technology Platform businesses, which are not capital-intensive like its lending business. In its announcement, SoFi said it intends to use the funds for “general corporate purposes,” which is as cursory a disclosure as a company can provide.

Meanwhile, while the stock sale was surprising, the price action wasn’t. Stock sales are usually dilutionary, and shares tend to fall after such offerings. Plus, SoFi priced shares at $27.50, which was below their trading price at the time.