Even by the standards of a lousy Wednesday for stocks in general, Fair Isaac (NYSE: FICO) was a standout in the wrong kind of way. For the second trading session in a row, the credit scoring specialist took a real blow to its stock price, which tumbled by almost 16% on the day. That percentage figure was 10 times the 1.6% decline of the S&P 500 (SNPINDEX: ^GSPC).
Fair Isaac not fair?
Investors who thought Fair Isaac stock would bounce back from its 8% drubbing on Tuesday were badly mistaken. That’s because Bill Pulte, director of the Federal Housing Finance Agency (FHFA) and the person behind critical remarks yesterday that spurred Fair Isaac’s swoon, singled out the company for criticism on Wednesday.
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In a post on X, formerly Twitter, Pulte wrote not very eloquently: “After the hard work by many great Senators, including Senator Tim Scott, I am extremely disappointed to hear about the costs increases by FICO onto American consumers.”
Several hours later, Pulte followed this with a swipe at the broader credit reporting business with a post somewhat awkwardly asking, “Why do some credit reports cost double (Biden’s term) from what they did during President Trump’s first term?”
Both imply a stance that the Trump administration considers credit scoring and reporting companies to be too powerful for its taste. Pulte has already expressed his desire to effect changes in how such companies interact with mortgage providers. If they happen, such changes could lead to a notable decline in volume for Fair Isaac’s business specifically.
Strong words
With this administration, however, there can ultimately be quite a difference between tough-sounding rhetoric and its actual approach to policy.
As we’ve seen with the “punitive” tariffs imposed on our trading partners earlier this year, Trump and his team can be willing to back down (and quickly) from certain stances. That being said, the administration could score some political points by reforming the overall mortgage business so it appears to favor borrowers. I’d therefore be cautious with Fair Isaac stock.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Fair Isaac. The Motley Fool has a disclosure policy.
