'The Big Short' Investor Steve Eisman Says He Is Short This Stock: ‘Very Arrogantly Raised Prices By 500%...’

• Eisman noted that even after Fair Isaac’s price cuts, his math shows that the charges for every 100 mortgage applications amount to $2,000, while VantageScore charges $99.
• The investor pointed out that the per-application charge comes to $20 at Fair Isaac and $0.99 at VantageScore.
• JPMorgan lowered its price target for Fair Isaac to $1,225 from $1,325, maintaining a ‘Neutral’ rating amid ongoing debate over the future of consumer credit scoring.

“The Big Short” investor Steve Eisman reportedly disclosed on Thursday that he has a short position in credit-scoring firm Fair Isaac Corp. (FICO).

During an interview with CNBC, Eisman stated that the prices Fair Isaac charges lenders for credit checks are higher than those charged by its rival, VantageScore.

“I think that FICO very arrogantly raised prices by 500% over the last many, many years… has ticked off literally everybody in the lending world,” Eisman said during the interview.

Fair Isaac shares were down nearly 6% in Thursday morning’s trade.

Eisman noted that even after Fair Isaac’s price cuts, his math shows that the charges for every 100 mortgage applications amount to $2,000, while VantageScore charges $99.

The per-application charge comes to $20 at Fair Isaac and $0.99 at VantageScore, he said.

According to TheFly, analysts at JPMorgan reduced their price target for Fair Isaac to $1,225 from $1,325 while keeping a ‘Neutral’ rating. The firm stated in its note that it expects continued debate around the future of consumer credit scoring.

Fair Isaac reported earnings per share (EPS) of $11.14 on revenue of $692 million in the second quarter (Q2), while Wall Street estimated an EPS of $10.97 on revenue of $627 million, according to Fiscal.ai data.

Eisman’s Take On Markets

Eisman added that he does not have a problem with the stock market right now, even though it is back to similar levels compared to a year ago.

He stated that the current market conditions also resemble last year's, with narratives such as AI-fueled spending, robust credit conditions, and a “K-shaped” economy dominating the conversation.

“We’re literally back to where we were last year, the same exact narrative, unchanged. It’s as if nothing happened in between,” he added.

Eisman also stated that while concerns that equity markets have become more expensive now are fair, the argument is not as compelling because technology stocks now account for a larger share of the S&P 500.

“Tech sells at higher multiples generally than everything else,” he said, while noting that he would stick to the stocks he currently owns, which are mostly tech and financial companies.

Eisman Downplays Private Credit Concerns

Eisman downplayed private credit concerns, noting that the problem with this segment is its overexposure to the software industry.

“Even if it creates a credit cycle, it’s not systemic because the banks are better capitalized than they probably ever were in their history,” he said, while adding that he is not sure if private credit woes will even have that much of an impact on the economy.

Morgan Stanley (MS) CEO Ted Pick stated earlier this month that the private credit market is in a “learning moment” and under increased scrutiny because it is in its relatively early days.

Pick added that the private credit market has “extraordinary” growth potential, while noting that it is just a question of time and working through economic cycles.

FICO stock is down 43% year-to-date and 51% over the past 12 months. The S&P 500 ETF (SPY) is up 29% over the past 12 months, while the Vanguard Growth Index Fund ETF (VUG) is up 31%.

The Vanguard Total Stock Market Index Fund ETF (VTI) is up 29% during this period.

Also See: PCE Report: Fed's Preferred Inflation Gauge Rises 3.5% In March, Q1 GDP Comes In At 2%

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