Please ensure Javascript is enabled for purposes of website accessibility

Why Axos Financial Stock Dropped Today

By Joe Tenebruso - Mar 9, 2020 at 5:08PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Failing interest rates could mean failing profits for the bank holding company.

What happened

Shares of Axos Financial (AX -1.07%) dropped 12.7% on Monday, coinciding with a major sell-off in bank stocks and the market as a whole.

So what

The financial markets, already reeling from fears that the COVID-19 coronavirus outbreak could stall the global economy, were rocked over the weekend by news that OPEC failed to reach an agreement with its allies to curtail oil production. Oil prices plunged more than 20% in response, taking a huge number of energy stocks down with them.

This frightening confluence of events sent investors scurrying toward safe-haven investments today. Investors piled into U.S. Treasury bonds, sending yields down to historic lows. In turn, shares of many banks -- whose profit margins tend to shrink when interest rates decline -- fell sharply.

Declining prices on a digital screen.

Banks stocks fell hard on Monday. Image source: Getty Images.

Now what 

Axos Financial makes much of its profit from the loans it lends to its customers. If interest rates remain depressed, its profitability will suffer. Moreover, should the U.S. economy fall into a recession due to the fallout from the COVID-19 outbreak, demand for the type of loans that Axos offers could decline. Given these potential challenges, Axos Financial's shares are likely to remain under pressure in the weeks ahead.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Axos Financial, Inc. Stock Quote
Axos Financial, Inc.
AX
$35.24 (-1.07%) $0.38

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
345%
 
S&P 500 Returns
119%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.