4Wk·

Is anyone here invested in Fair Isaac, or is anyone planning to invest? The stock just keeps plummeting.

9 Comments

4Wk

Here, policymakers are trying to prevent a “moat”—in other words, a near-monopoly—from forming. They’re urging lenders to use other platforms as well. I can’t say to what extent this will weigh on FICO in the long term. In my opinion, the sell-off over the past few days—and yesterday’s in particular—has been excessive. FICO is also expanding into Asia, thereby attempting to offset any potential decline in the U.S. But an analysis by the analysts might shed a little more light on the situation. 🆘 @Raketentoni, @Aktienhauptmeister

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Brian@Aktienhauptmeister

4Wk

@Tenbagger-Capital

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Tenbagger-Capital@Tenbagger-Capital

4Wk

Furthermore, when it comes to AI, I see FICO as a very exciting investment because the company possesses a vast treasure trove of data, which could become even more valuable in the context of AI.

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user03@user03

4Wk

@Tenbagger-Capital I only became aware of the company because of the sell-off. So you think the company can remain relevant in the long term? As I understand it, FICO is somewhat comparable to Schufa, only with a much greater focus on the past. The government is currently breaking them up quite a bit.

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Tenbagger-Capital@Tenbagger-Capital

4Wk

@user03 The question is to what extent competitors are now entering the market—and, in turn, driving down prices—which could ultimately affect FICO’s very strong margins. You can really sense a lot of uncertainty right now. On the other hand, the question is to what extent AI could threaten the business model. My opinion is that the company should be able to profit from its wealth of data. But I’m not deeply enough involved in what’s going on there. I wouldn’t jump in and buy right now—it’s like catching a falling knife.

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user03@user03

4Wk

@Tenbagger-Capital Okay, perfect. Thanks for your opinion. I'll stay away from it for now, too.

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asset_sage_smmad@asset_sage_smmad

4Wk

Since you mentioned investing: What is it? Why would anyone want to own it? Who are the competitors (why not buy them instead)? What’s the management like? Have you looked at the financial statements, and what do you think of them? Why has the stock been falling for so long, and why would it suddenly start going up again now?

Question after question.

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user03@user03

4Wk

@asset_sage_smmad Chill, I just wanted to know if there are any people involved there so I could strike up a conversation 😂

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asset_sage_smmad@asset_sage_smmad

4Wk

@user03 Here’s something from ChatGPT: the business model is fundamentally flawed, so you’d be better off not buying it:

Why You Shouldn’t Buy FICO Right Now

1. Its most important moat is being breached.
For decades, FICO held a virtual monopoly in the U.S. mortgage market. For loans through Fannie Mae and Freddie Mac, the FICO score was practically the standard. Now, lenders can choose between Classic FICO and VantageScore 4.0.

2. VantageScore is already gaining market share.
As of the end of August 2026, VantageScore 4.0 was already being used as the sole score in more than 9% of Fannie/Freddie mortgages securitized since May. That’s relatively rapid market penetration.

3. FICO’s enormous pricing power is under pressure.
If banks can use a viable alternative score, FICO will no longer be able to charge high prices so easily. It was precisely this pricing power that was a key component of its exceptionally high margins.

4. The threat could extend beyond Fannie/Freddie.
The FHA is set to accept VantageScore 4.0 starting January 1, 2027. This will give VantageScore access to another important segment of the U.S. mortgage market.

5. VantageScore is not an insignificant competitor.
There are now serious debates over which model better predicts default risk. VantageScore cites a study that ranks VantageScore 4.0 as the leader; FICO cites a Milliman analysis that ranks FICO 10T as the leader. The respective company claims should be viewed with a critical eye.

6. FICO 10T does not solve the problem immediately.
While FICO does have a modern model of its own in FICO 10T, it is not yet available for lending at Fannie Mae/Freddie Mac.

The key point

The argument is not:

> “The FICO score is disappearing.”

But rather:

> “FICO is losing the regulatory-protected competitive advantage that has turned a good product into an extremely profitable quasi-monopoly.”

And that is precisely what matters to an investor.

The dangerous scenario would be:

lower market share + lower prices + more competition → permanently lower margins

For a company whose valuation is partly based on exceptionally high margins and a very strong moat, this could justify a significantly greater loss in value than just the recent decline in the stock price.

That’s why I’d be cautious about saying “FICO is now 30% cheaper.”

The price decline doesn’t automatically make the stock a bargain.

Rather, one must ask:

How high will sustainable earnings be if FICO has to compete with VantageScore in mortgage scoring in the future?

If, for example, the market previously implicitly assumed that FICO could maintain its prices and margins virtually indefinitely, then a reassessment of the business model may be warranted, even if the stock price has already fallen sharply.

The strongest argument against buying the stock, therefore, is not that FICO has become a bad company—but that the company’s most important competitive advantage is currently becoming significantly weaker.

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