FICO (NYSE:FICO) lost ground in trading after investor Steve Eisman publicly revealed a short position in the credit scoring company. Shares slid 2.7% following Eisman’s comments on CNBC, where he criticized the firm’s pricing and its relationships with lending institutions.
During the television interview, Eisman said FICO had "arrogantly raised prices" and had "ticked off" everybody in the lending world. The remarks were made in the context of explaining his bearish stance on the company.
Eisman is widely known for placing a successful bet against subprime mortgages prior to the 2008 financial crisis. On this occasion, he used a national broadcast to disclose his short position and articulate his concerns about how FICO interacts with its customers in the lending sector.
FICO provides credit scoring and analytics services used by financial institutions and lenders. The company’s FICO scores are broadly employed in credit decision-making across the lending industry.
Market move and context
The market reaction - a 2.7% decline in FICO shares - followed directly after Eisman’s on-air disclosure and comments about the company’s pricing practices. The investor framed his short position around those criticisms and the sentiment he said existed among lenders.
What was said
FICO has "arrogantly raised prices" and has "ticked off" everybody in the lending world.
Those two phrases were central to Eisman’s explanation during the interview and formed the basis for the immediate market response.
Summary takeaways
- FICO shares declined 2.7% after a short position disclosure by Steve Eisman on CNBC.
- Eisman criticized FICO's pricing and said the company had upset lenders.
- FICO is a major provider of credit scoring and analytics to financial institutions and lenders, and its scores are widely used in credit decisions.
The disclosure and accompanying remarks prompted the stock move, and the public nature of the comments linked investor sentiment directly to the company’s perceived commercial conduct with lenders.