The news comes just after a strong February, where the company's shares rose nearly 15% following its impressive fourth-quarter earnings report indicating faster-than-expected profitability.

The company disclosed its plans to issue $750 million worth of convertible senior notes due in 2029 to undisclosed private investors. Additionally, SoFi intends to offer an overallotment option that could potentially increase the total value of the debt offering to $862.5 million. While the interest rate on this debt has not been disclosed, market observers are intrigued by the company's decision to proceed with the offering amidst expectations of declining interest rates later in the year.

Investors have reacted negatively to the news, as it suggests that SoFi might be facing financial constraints. The convertible nature of the debt also raises concerns about potential shareholder dilution if the debt were to be converted into stock in the future.

On the other hand, SoFi outlined its intention to use a portion of the raised funds to redeem a specific preferred stock that currently imposes a 12.5% annual dividend cost on the company. If the interest rate on the convertible debt is lower than 12.5%, this move could potentially reduce SoFi's interest expenses and consequently boost profitability.

Furthermore, the company plans to utilize the proceeds from the offering to enter into "capped call transactions," aimed at minimizing potential dilution to its common stock upon conversion of the notes. While the news of taking on additional debt may initially worry investors, the overall impact could be less severe than anticipated.

Looking ahead, SoFi is expected to report its first profitable year in 2024 with projected earnings of $0.07 per share, followed by strong growth in subsequent years. This positive outlook suggests that the short-term sell-off in SoFi's stock may present a buying opportunity for long-term investors.

While SoFi Technologies wasn't among the 10 best stocks recently identified by The Motley Fool Stock Advisor analyst team, it's important to consider their years of strong performance, providing valuable insights and guidance to investors. The Stock Advisor service has significantly outperformed the S&P 500 since 2002, highlighting its success in identifying investment opportunities.

Disclaimer: Rich Smith does not hold any positions in the mentioned stocks, and The Motley Fool does not have a position in any of the listed stocks. The provided information is for informational purposes only.