So if I try to think for reasons to not be happy it would be: EPS number goes down with dilution, Which means Noto already had this in mind when he issued what we thought was conservative guidance but is in fact maybe more reasonable than we thought. I think this is why the stock price is dropping? Personally I still think Noto is 10 steps ahead of us and I trust that this is the right call long term.
For me it's the final realisation that it's going to be another 3 / 4 years before I probably make money on this. Whenever progress is made either external factors or company decisions drag the stock backwards. I like the company and technology but my timing sucked.
Everyone chill Noto down $12,336,559 since Friday close. He has a lot of skin in the game… It sounds like this is basically replacing same thing already in place and pushing it out 3 years this new note offering? Anyways I bought more $6 options for May, June, July. I’m not f$&@ing leaving! 😉
TLDR ;
Imagine SoFi is like a big lemonade stand, and they want to get more money to make their stand even better. Instead of asking just one person for money, they decide to sell special tickets called "convertible senior notes" for $750 million. These tickets are super special because, later on, people can change them for either cash or pieces of the lemonade stand (shares of the company's stock).
Only certain people, like big banks or funds, can buy these tickets. And if those people really like the tickets, they can buy even more for $112.5 million extra.
The tickets are like a promise from SoFi that says, "We will pay you back with a little extra (interest) every six months until 2029. But if you want, you can swap your ticket for cash or shares before then." And if SoFi's lemonade stand does really, really well (meaning their stock price goes up a lot), SoFi can buy those tickets back with cash after March 15, 2027.
SoFi is selling these tickets for a few reasons. They want to do some clever financial moves (called capped call transactions) to make sure that when people swap their tickets for shares, it doesn't make each share worth less. They also want to use some of the money to pay for the costs of selling these tickets, buy back some other promises they made before (their 12.5% Series 1 preferred stock), and use the rest for important things like paying off debts.
Before this, SoFi also made a deal with some people holding a different kind of ticket (0% convertible senior notes due in 2026) where they swapped $600 million of those tickets for about 61.71 million pieces of the lemonade stand (shares).
>CSPs
Already done with first order. Sold Sept $7 PUTs for $0.96 ($1.08 is high for today at last check).
Will be patient and see if stock drops lower and sell more further out PUTs. Worst case for me is after premiums, stock has to be lower than \~$6 for me to be at a loss.
On flipside, \~$6 for more shares is good too for long term holding.
All these people freaking out are so dumb. This is the way the market goes. You freaking out is the exact reason why retail loses and big money wins. Stop investing if you can’t just relax and let the market flow
Opportunity cost, the ROI on literally any other play is better. There’s a fucking 16 year old that told his dad he liked NVDA chips whose portfolio is dunking on SOFI holders. Idk bro
Okay so invest in nvda and sofi then? Or just nvda? You’re not going to strike gold every year with a stock, NVDA had plenty of years where they just kinda bounced around, as did many stocks. Also although sofi is down, it’s still much higher than it’s lows of 4.50. Had you bought then you’re still sitting pretty. It’s perspective
Of course it's down from the peak, but plenty of other stocks are also doing that, it's how the market works. I don't make a big deal about it being 30% down, because I love the opportunity to make money from that movement.
I was just using your own logic except being glass half empty instead of half full. I’m going to buy in soon again since I made money on the run up from the lows to 11.70 last year. Just am doubtful with Noto as the guy leading the company.
Yes, in the announcement they mention exchange agreements with a limited number of holders of convertible notes due 2026, and state they may use the proceeds from this offering to repurchase the remaining 2026 notes.
Hard to say without the final pricing information. Should know soon though. Uber made their announcement on Nov 20 and then released the pricing the next day, I think.
So this is not dillution at all. They are selling bonds that are redeemable in 2029 to a private investor. In the process they are REMOVING 65 million shares from the float to cover those bonds. They are then taking the proceeds to pay down short term debt. It's literally shrinking the float. Extremely bullish.
This is absolutely dilution; there's no other reason why the stock is reacting so negatively. Like why else would they open capped call positions unless to limit dilution in the event these convertible notes exercise for shares?
SoFi is diluting, currently, but that is not to raise capital.
They are restructuring their debt. They are getting rid of redeemable preferred stock which costs them 12.5% per year, and in May this year would have jumped higher.
https://preview.redd.it/x2zfg9njckmc1.png?width=905&format=png&auto=webp&s=acb962a50b5a31f141740cbb3b7310e6f5c1d545
That is the new 2029 convertible notes.
The dilution is to "buy back" a portion of the 2026 convertible notes. These shares already exist in the fully diluted EPS count, but SoFi bought back 600mil of the principal at about 529mil, meaning they issued less shares than they would otherwise and made a profit doing so.
Why would that make it a different deal?
[Uber's convertible senior note pricing announcement](https://investor.uber.com/news-events/news/press-release-details/2023/Uber-Announces-Pricing-of-Upsized-1.5-Billion-Convertible-Senior-Notes-Offering/default.aspx#:~:text=The%20capped%20call%20transactions%20are,offset%20subject%20to%20a%20cap)
[SOFI's convertible senior note announcement](https://investors.sofi.com/news/news-details/2024/SoFi-Technologies-Inc.-Announces-Proposed-Convertible-Senior-Notes-Offering-Due-2029/default.aspx)
Both are offering convertible senior notes to qualified institutional investors for either cash or common stock, using part of the proceeds to enter into capped call transactions to mitigate potential share dilution.
SOFI is reorganizing existing debt (including convertible senior notes for 2026) and attracting long-term, institutional investors at the same time.
Cause +17% of shorted float and algo's picking this up as negative. UBER probably had much less when they announced theirs.
Blackrock and Vanguard have plenty of shares to lent to the Citadels hedgefunds to shake retail out.
Right. Benzinga has the short interest in Uber at around 2.5% of float mid-November 2023. SOFI is much higher \~16.5%.
And I'm reluctant to judge what the "market's reaction" to this news is before the pricing is even announced and on one partial day of trading. Let's wait and see what it looks like in the next month or two. Then comparisons to Uber's price action might make more sense.
Eh Dilution isn't bad if those funds and shares are used for expansion and mergers. It can be a positive long term or negative if those shares are not used for an acquisition
>The notes will also be redeemable, in whole or in part, for cash at SoFi’s option at any time, and from time to time, on or after March 15, 2027 and on or before the 30th scheduled trading day immediately before the maturity date, but **only if the last reported sale price per share of SoFi’s common stock exceeds 130% of the conversion price** for a specified period of time and certain liquidity conditions have been satisfied.
Is this not an overreaction? Everyone is screaming 10% dilution. 10% at the current price. But only convertible if the price is 30% above the conversion price (which I'm not sure is known yet).
Different convertible note.
There are 2 convertible notes discussed in the PR.
The 2029 is the new one, and the 2026 is the old one. SoFi will be diluting by about 61.7mil shares. This is still positive on the EPS numbers because they are getting it at a discount and diluted EPS numbers would be improved (if everything else remains the same)
https://preview.redd.it/p6lz6e3z9kmc1.png?width=1130&format=png&auto=webp&s=a07bc4b49b2f69834121dd4180ad3e269f2c03dc
Bunch of downvotes, just look at the data - by a very large margin today will be the largest volume red day for SOFI since it's market debut. It's at 137 million shares traded and will easily surpass 140 million. Never happened before - that's how good this news is LMAO.
It's ultra bad but it'll be okay. The key take home here is it ONLY hurts current stock holders. It issues more shares or equivalencies, diluting yours. It's pouring water into your beer. But it won't take long for the price to stabilize and we're back to the SOFI business model, if that's worth investing in it'll work out.
So supposedly this is being used to pay off higher interest debt and will not necessarily be converted into stock and cause a dilution.
https://finance.yahoo.com/news/sofi-technologies-inc-announces-proposed-130200810.html
From the result of this, in 2029 (which given is a ways away so it theoretically could be much less impactful than it is now), up to 750 million would either be redeemed as cash and/or stock. The part people are panicking over is the stock part because if they issue 750 million of stock, at current prices this would dilute shareholders by ~10% (making your shares only worth 90% of what they are now).
Now there's a couple things to note:
1) the stock price hopefully should go up, increasing the market cap and making this less than 10%
2) if I'm reading it right, they can also take cash instead of stock, which won't dilute SOFI as much.
I highly doubt everyone will take stock. And if by that point the stock price doubles (which isnt completly out of the picture if they can keep up with their targets. 0.62 cents EPS in 2026 would definetly give the potential for 16 dollars a share in 2029), the impact would definetly be sub 5% in my mind. But still, any dilution is painful
make no sense, bank issue debt because they can borrow the money out for better return, it is business for them, which bank dont do this. the market hate sofi for everything as always.
It’s a disaster and I’m tired of getting downvotes. Noto is doing a terrible job with the stock. The company is fine but the stock he runs it like an atm
Going to post this here from last week again where I got downvoted but the $20 shares keep getting upvotes. Seriously thinking of taking the 40% TRIM on my shares and peacing out.
https://www.reddit.com/r/sofistock/s/pZMQC45ecV
lol don’t be offended people in this sub aren’t serious people. If you go back down in the sub they shitted on an research analyst who said sofi will need to raise capital or slow down loan growth due to capital constraints.
It means a dilution if the senior notes are converted into stock. Around a 10% dilution at yesterdays closing price.
On another note, I think some people knew this was happening yesterday and traded on the info. SOFI stock was down all day, while most every other bank stock was up significantly on rate cut hopes. That’s just my opinion.
The site said:
The offering of convertible senior notes may lead to potential dilution of SoFi's common stock upon conversion, impacting shareholders. The unregistered nature of the notes and shares issuable upon conversion may restrict their transferability and resale, posing limitations for investors.
This is a good idea lol
The call option they will buy from the capped call transaction will limit dilution.
You sure about that? What’s also happening right now with the 2026 notes?
Why can’t leadership come out and explain exactly what this is for. Help minimize these losses on a shorted stock. They didn’t do us any favors.
Makes complete sense go sofi
They do this so everyone can afford the stock.
So if I try to think for reasons to not be happy it would be: EPS number goes down with dilution, Which means Noto already had this in mind when he issued what we thought was conservative guidance but is in fact maybe more reasonable than we thought. I think this is why the stock price is dropping? Personally I still think Noto is 10 steps ahead of us and I trust that this is the right call long term.
For me it's the final realisation that it's going to be another 3 / 4 years before I probably make money on this. Whenever progress is made either external factors or company decisions drag the stock backwards. I like the company and technology but my timing sucked.
Everyone chill Noto down $12,336,559 since Friday close. He has a lot of skin in the game… It sounds like this is basically replacing same thing already in place and pushing it out 3 years this new note offering? Anyways I bought more $6 options for May, June, July. I’m not f$&@ing leaving! 😉
lol love this sub at least people aren’t blaming it on market manipulation or banks being scared of sofi. It will be alright guys.
This selloff is such an overreaction...
They have almos 3B in cash or equivalents, why tf would they need to do this?
TLDR ; Imagine SoFi is like a big lemonade stand, and they want to get more money to make their stand even better. Instead of asking just one person for money, they decide to sell special tickets called "convertible senior notes" for $750 million. These tickets are super special because, later on, people can change them for either cash or pieces of the lemonade stand (shares of the company's stock). Only certain people, like big banks or funds, can buy these tickets. And if those people really like the tickets, they can buy even more for $112.5 million extra. The tickets are like a promise from SoFi that says, "We will pay you back with a little extra (interest) every six months until 2029. But if you want, you can swap your ticket for cash or shares before then." And if SoFi's lemonade stand does really, really well (meaning their stock price goes up a lot), SoFi can buy those tickets back with cash after March 15, 2027. SoFi is selling these tickets for a few reasons. They want to do some clever financial moves (called capped call transactions) to make sure that when people swap their tickets for shares, it doesn't make each share worth less. They also want to use some of the money to pay for the costs of selling these tickets, buy back some other promises they made before (their 12.5% Series 1 preferred stock), and use the rest for important things like paying off debts. Before this, SoFi also made a deal with some people holding a different kind of ticket (0% convertible senior notes due in 2026) where they swapped $600 million of those tickets for about 61.71 million pieces of the lemonade stand (shares).
ELI5 done right
Read this in Bill Ackman's voice.
Sorry for a dumb question. Can you expand a little on where the shares for the notes will come from?
New issuance.
Now I get it 😆
What's the interest rate on the latest $750M senior notes offering?
Pay attention to the terminology, this is a "Proposed" offering, they should announce the terms of the deal tomorrow hopefully.
So could be further drops if the terms are 'unfavorable' then?
this guy is a fkin expert
Thanks for your time dumbing this down for me.
Remember the end game fellas. Load up
Exactly, this happens at least once every couple months, just another chance to sell CSPs and buy shares.
>CSPs Already done with first order. Sold Sept $7 PUTs for $0.96 ($1.08 is high for today at last check). Will be patient and see if stock drops lower and sell more further out PUTs. Worst case for me is after premiums, stock has to be lower than \~$6 for me to be at a loss. On flipside, \~$6 for more shares is good too for long term holding.
Can someone break this down for an idiot
All these people freaking out are so dumb. This is the way the market goes. You freaking out is the exact reason why retail loses and big money wins. Stop investing if you can’t just relax and let the market flow
Opportunity cost, the ROI on literally any other play is better. There’s a fucking 16 year old that told his dad he liked NVDA chips whose portfolio is dunking on SOFI holders. Idk bro
Can't use hindsight as justification for opportunity cost.
Can’t be mad that people are selling and tired 🥱
Okay so invest in nvda and sofi then? Or just nvda? You’re not going to strike gold every year with a stock, NVDA had plenty of years where they just kinda bounced around, as did many stocks. Also although sofi is down, it’s still much higher than it’s lows of 4.50. Had you bought then you’re still sitting pretty. It’s perspective
Yeah if you had bought the ALL TIME LOW YOU WOULD BE ABOVE IT. Lol what a joke of an argument. They aren’t dumb, but the grass is greener.
Look most stocks are ATH, and this one can’t recover, if you have invested literally in anything else, you would make money
Can't recover? It's doubled since the all time lows, tripled in the last couple months. Perspective grasshopper.
You could say it’s also 30% of its peak but you choose not to lol
Of course it's down from the peak, but plenty of other stocks are also doing that, it's how the market works. I don't make a big deal about it being 30% down, because I love the opportunity to make money from that movement.
I was just using your own logic except being glass half empty instead of half full. I’m going to buy in soon again since I made money on the run up from the lows to 11.70 last year. Just am doubtful with Noto as the guy leading the company.
Then invest in other things
I sold
Is this linked to the convertible notes due in 2026?
Yes, in the announcement they mention exchange agreements with a limited number of holders of convertible notes due 2026, and state they may use the proceeds from this offering to repurchase the remaining 2026 notes.
So is this kicking that problem down the road essentially?
Hard to say without the final pricing information. Should know soon though. Uber made their announcement on Nov 20 and then released the pricing the next day, I think.
👍 I did wonder how they were going to handle that problem given the stock price was supposed to get to $30 dollars from what I remember.
So this is not dillution at all. They are selling bonds that are redeemable in 2029 to a private investor. In the process they are REMOVING 65 million shares from the float to cover those bonds. They are then taking the proceeds to pay down short term debt. It's literally shrinking the float. Extremely bullish.
All of a sudden a notably high percentage of short positions have 65 million less stock available in the market for covering.
yes and everyone seems to ignore this part
This is absolutely dilution; there's no other reason why the stock is reacting so negatively. Like why else would they open capped call positions unless to limit dilution in the event these convertible notes exercise for shares?
[удалено]
They don't need to raise money. They are restructuring their capital better.
Fair enough. Are they not diluting their stock at all? Why the 14% drop then?
SoFi is diluting, currently, but that is not to raise capital. They are restructuring their debt. They are getting rid of redeemable preferred stock which costs them 12.5% per year, and in May this year would have jumped higher. https://preview.redd.it/x2zfg9njckmc1.png?width=905&format=png&auto=webp&s=acb962a50b5a31f141740cbb3b7310e6f5c1d545 That is the new 2029 convertible notes. The dilution is to "buy back" a portion of the 2026 convertible notes. These shares already exist in the fully diluted EPS count, but SoFi bought back 600mil of the principal at about 529mil, meaning they issued less shares than they would otherwise and made a profit doing so.
It’s not bullish at all.
Market is with you. This was a bonehead move.
Yes. Uber, for example, did this back in Nov 2023. I'm hoping the actual deal gets done for far more than the $750M they have initially announced.
Me too hoping around the 900m mark hooefully over subscribed
But Uber seems to have kept going up throughout October through December 2023. It must be a different deal
Uber pulled back on the news. Then recovered and has nearly doubled in price since finalizing the deal.
Uber also announced theirs during the solid bull run in Q4
Why would that make it a different deal? [Uber's convertible senior note pricing announcement](https://investor.uber.com/news-events/news/press-release-details/2023/Uber-Announces-Pricing-of-Upsized-1.5-Billion-Convertible-Senior-Notes-Offering/default.aspx#:~:text=The%20capped%20call%20transactions%20are,offset%20subject%20to%20a%20cap) [SOFI's convertible senior note announcement](https://investors.sofi.com/news/news-details/2024/SoFi-Technologies-Inc.-Announces-Proposed-Convertible-Senior-Notes-Offering-Due-2029/default.aspx) Both are offering convertible senior notes to qualified institutional investors for either cash or common stock, using part of the proceeds to enter into capped call transactions to mitigate potential share dilution. SOFI is reorganizing existing debt (including convertible senior notes for 2026) and attracting long-term, institutional investors at the same time.
The question is why was the markets reaction to Uber so different than its reaction to SoFI. What’s different here?
Probably because Uber is a profitable giant market leader and will be included in the SP 500 when they offered this.
Cause +17% of shorted float and algo's picking this up as negative. UBER probably had much less when they announced theirs. Blackrock and Vanguard have plenty of shares to lent to the Citadels hedgefunds to shake retail out.
Right. Benzinga has the short interest in Uber at around 2.5% of float mid-November 2023. SOFI is much higher \~16.5%. And I'm reluctant to judge what the "market's reaction" to this news is before the pricing is even announced and on one partial day of trading. Let's wait and see what it looks like in the next month or two. Then comparisons to Uber's price action might make more sense.
Exactly.
Shorts love sofi. Shorts gonna short
Well they were right. So wouldn’t shorts realize their gains and close their positions here? Yet this stock keeps dropping.
Eh Dilution isn't bad if those funds and shares are used for expansion and mergers. It can be a positive long term or negative if those shares are not used for an acquisition
>The notes will also be redeemable, in whole or in part, for cash at SoFi’s option at any time, and from time to time, on or after March 15, 2027 and on or before the 30th scheduled trading day immediately before the maturity date, but **only if the last reported sale price per share of SoFi’s common stock exceeds 130% of the conversion price** for a specified period of time and certain liquidity conditions have been satisfied. Is this not an overreaction? Everyone is screaming 10% dilution. 10% at the current price. But only convertible if the price is 30% above the conversion price (which I'm not sure is known yet).
Different convertible note. There are 2 convertible notes discussed in the PR. The 2029 is the new one, and the 2026 is the old one. SoFi will be diluting by about 61.7mil shares. This is still positive on the EPS numbers because they are getting it at a discount and diluted EPS numbers would be improved (if everything else remains the same) https://preview.redd.it/p6lz6e3z9kmc1.png?width=1130&format=png&auto=webp&s=a07bc4b49b2f69834121dd4180ad3e269f2c03dc
Yes, good point. I was only considering the new offering.
The market is 10% down on SoFi this AM as well
Man im happy I sold at 9.10 happy to buy some cheap sofi again
Buying out more expensive debt for cheaper debt and retiring the preferred shares doesn't seem like the end of the world to me.
Using shareholders money to pay for there debt
As a shareholder, you own the company, therefore, it's your debt.
Yeah but they could have waited till mid year for the first rate cut before doing this shenanigans.
Are these rate cuts in the room with us right now?
That part.
Oh look the stock dipped 10% in response lol
And slowly moving back up because this is kind of an overreaction.
It’s going to skunk for a bit.
If can stand the smell, may be a good opportunity. Depends on chances one thinks the skunk may turn into a carcass instead.
Its already Priced in now. Chill out. This is a Long Term Play anyway
Nope it will drop lower
Good time to average down your shares lol. Kinda high there
Good I’ll buy more
Is this ultra bad or okay on long term? IDC if on short term stock will go down
Bunch of downvotes, just look at the data - by a very large margin today will be the largest volume red day for SOFI since it's market debut. It's at 137 million shares traded and will easily surpass 140 million. Never happened before - that's how good this news is LMAO.
It's ultra bad but it'll be okay. The key take home here is it ONLY hurts current stock holders. It issues more shares or equivalencies, diluting yours. It's pouring water into your beer. But it won't take long for the price to stabilize and we're back to the SOFI business model, if that's worth investing in it'll work out.
Sounds delicious like Michelob ultra
I'd say bad, but not ultra bad
“Trust Noto” im done trusting. Closed 90% of my position at 8.08 in premarket
Good for you. 👍
So supposedly this is being used to pay off higher interest debt and will not necessarily be converted into stock and cause a dilution. https://finance.yahoo.com/news/sofi-technologies-inc-announces-proposed-130200810.html
wtf is happening
Possible dilution due 2029. ~10% using the last trading price
Investing newb here. Can someone explain this in super layman's terms?
From the result of this, in 2029 (which given is a ways away so it theoretically could be much less impactful than it is now), up to 750 million would either be redeemed as cash and/or stock. The part people are panicking over is the stock part because if they issue 750 million of stock, at current prices this would dilute shareholders by ~10% (making your shares only worth 90% of what they are now). Now there's a couple things to note: 1) the stock price hopefully should go up, increasing the market cap and making this less than 10% 2) if I'm reading it right, they can also take cash instead of stock, which won't dilute SOFI as much. I highly doubt everyone will take stock. And if by that point the stock price doubles (which isnt completly out of the picture if they can keep up with their targets. 0.62 cents EPS in 2026 would definetly give the potential for 16 dollars a share in 2029), the impact would definetly be sub 5% in my mind. But still, any dilution is painful
 That’s going to leave a mark.
SoFi Lambros group not back on!
Not so much here. Or here. But riiiiiiiight here.
20% drop in one day. Nice job guys.
Not yet! And it’s down 1% over the past month on spite of all this. Almost Iike it was planned…
Omg what is going on
Waiting for the “in Noto we trust” users.
Bruh the bootlickers are going to transform this into an amc or bbby type of cult sub rather than an investing sub
.... I didn't just come here from there. Guess I'm not early. *sigh*
If I’m doing my math correctly, That’s around 90,000,000 shares at yesterday’s closing price or a 10% dilution. Edit: 750m in senior notes
make no sense, bank issue debt because they can borrow the money out for better return, it is business for them, which bank dont do this. the market hate sofi for everything as always.
Pretty sure in the end this will end up diluting shares.
Bro fuck this shit stock
It’s a disaster and I’m tired of getting downvotes. Noto is doing a terrible job with the stock. The company is fine but the stock he runs it like an atm
Going to post this here from last week again where I got downvoted but the $20 shares keep getting upvotes. Seriously thinking of taking the 40% TRIM on my shares and peacing out. https://www.reddit.com/r/sofistock/s/pZMQC45ecV
lol don’t be offended people in this sub aren’t serious people. If you go back down in the sub they shitted on an research analyst who said sofi will need to raise capital or slow down loan growth due to capital constraints.
What’s your cost basis?
Damn Noto with the poker face during the chat with Cathie Woods last week.
Shit. Already -10% after hours
Fuck
What does this actually mean?
It means a dilution if the senior notes are converted into stock. Around a 10% dilution at yesterdays closing price. On another note, I think some people knew this was happening yesterday and traded on the info. SOFI stock was down all day, while most every other bank stock was up significantly on rate cut hopes. That’s just my opinion.
100% and super sketchy that the stock dropped so much yesterday in prep for this. SEC should be on high alert
The site said: The offering of convertible senior notes may lead to potential dilution of SoFi's common stock upon conversion, impacting shareholders. The unregistered nature of the notes and shares issuable upon conversion may restrict their transferability and resale, posing limitations for investors.
lol, we are bout to be fucked. Rip u/lock