The stock market had its worst day since 2008 on Monday, with the Dow Jones Industrial Average and S&P 500 index both down by more than 7%. The financial sector was one of the hardest-hit parts of the market, and financial-services company Fair Issac (NYSE:FICO) was no exception. The stock closed down nearly 12% and is nearly 28% below its 52-week high reached just a few weeks ago.
There's no specific company-related news that caused Fair Issac to drop. The financial-services company, best known for its FICO credit scoring model, was mainly dragged down by overall market weakness.
Financial stocks in general took a big hit. In Fair Isaac's case, the company relies somewhat on consumer spending for its myFICO credit monitoring platform, which could take a serious hit if a recession comes and consumers cut back on spending. And since Fair Isaac makes money every time a credit report is run, a decrease in demand for loan products and such could hurt revenue as well.
With all of that said, I wouldn't read too much into today's move, as it has little to do with Fair Isaac's business itself. The company's model will still be used to process most credit decisions, as there's nothing to suggest that its dominance of the credit scoring industry is in jeopardy. Nothing really has changed -- the stock is just trading for much less. There could certainly be more turbulence ahead for Fair Isaac and the overall stock market, but if you liked the company a week ago as a long-term investment, there's no reason you shouldn't like it today.