FICO faces a significant stock slide due to new competition in credit scoring from Fannie Mae and Freddie Mac. This shift aims to enhance credit access for rural borrowers. Meanwhile, CoreWeave's shares dip after an acquisition and analyst downgrades raise concerns. Big bank stocks are on shaky ground, with HSBC cautioning investors about potential downturns. As analysts brace for earnings reports, the banking sector feels the pressure amid a record rally.
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FICO Shares Tumble on Competition
FICO shares plunged the most since March 2020 after the FHFA allowed Fannie Mae and Freddie Mac to accept the Vantage 4.0 credit model.
This move aims to boost competition, expand credit access, and reduce closing costs, challenging FICO's dominance.
insights INSIGHT
CoreWeave Downgraded Post-Acquisition
CoreWeave shares declined after downgrades linked to its all-stock acquisition of Core Scientific.
Analysts expressed concerns about dilution and shifting to a more asset-heavy business model, affecting investor sentiment.
question_answer ANECDOTE
CoreWeave's Unexpected HQ Location
CoreWeave is headquartered in Livingston, New Jersey, near New York City.
This is surprising given expectations it might be based in tech hubs like Silicon Valley or New York.
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On this episode of Stock Movers: - Fair Isaac (EFX), better known as FICO, saw shares headed for its worst slide since March 2020, after federal regulators said government-sponsored mortgage entities Fannie Mae and Freddie Mac will be able to use a second firm when determining borrowers’ creditworthiness. Federal Housing Finance Agency Director Bill Pulte said in a post on X that Fannie and Freddie will now allow lenders to accept the Vantage 4.0 credit model to “increase competition” in the credit score ecosystem.Pulte said the move should expand credit access to millions of potential borrowers living in rural areas and bring down closing costs. Since joining the FHFA, Pulte has pledged to do “a full scale review” of all credit bureaus. He also suggested that FICO should focus on being more economical in their pricing. - CoreWeave (CRW) shares dipped after it was downgraded to neutral-equivalent ratings at Stifel and Mizuho, following the company’s all-stock acquisition of data-center operator Core Scientific Inc. The Cloud infrastructure provider was also initiated with a hold rating at CFRA while Citi adds a 90-day downside catalyst watch to the stock. - Big bank stocks, including shares of Bank of America (BAC) slid after some analysts warned of downside risks. HSBC is turning cautious on three of the biggest US bank stocks following a record rally that’s brought the group within shouting distance of an all-time high. “Downside risks associated with still-elevated macro uncertainty, potentially slowing economic growth and more interest rate cuts through 2025 and 2026 are generally not factored into the stock prices,” analyst Saul Martinez wrote in a note downgrading JPMorgan Chase & Co., Goldman Sachs Group Inc. and Bank of America Corp. At the same time, “the repricing of fixed-rate assets, benign credit quality, improving investment banking activity, and a favorable regulatory backdrop are well priced in.”
Stock Movers