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FNMA Shares Plummet: Time to Cut Losses?

Bryce TuoheyAvatar
Written by Bryce Tuohey
Reviewed by Tim Sykes Fact-checked by Matt Monaco

The Federal National Mortgage Association’s stock is under pressure following news about regulatory changes affecting the mortgage industry, with these concerns exacerbating the company’s market outlook. On Monday, Federal National Mortgage Association’s stocks have been trading down by -6.92 percent.

Market Impact Highlights

  • Wedbush analyst Brian Violino has increased the price target for FNMA to $1, noting a cautious stance due to potential capital needs and dilution risks despite improved sentiment.

Candlestick Chart

Live Update At 11:37:09 EST: On Monday, February 03, 2025 Federal National Mortgage Association stock [NASDAQ: FNMA] is trending down by -6.92%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

  • Keefe Bruyette downgraded FNMA amid considerable risks surrounding potential unsuccessful privatization attempts, setting a price target of $4.

  • Rising 10-year Treasury yield impacts mortgage rates, with FNMA projecting sales and home price growth declines for upcoming years through their Economic and Strategic Research Group.

Earnings Snapshot and Market Dynamics

Trading can often be a turbulent experience, characterized by its unpredictability and inherent risks. It’s essential for traders to maintain a mindset that is receptive to both the successes and the failures encountered along the way. As millionaire penny stock trader and teacher Tim Sykes says, “Embrace the journey, the ups and downs; each mistake is a lesson to improve your strategy.” This philosophy is crucial for anyone navigating the volatile world of trading, as it emphasizes learning from mistakes and using those valuable insights to enhance future strategies. Acknowledging that each setback can be a stepping stone to greater success is what sets exceptional traders apart.

Fannie Mae’s latest financial disclosures reveal a fascinating contradiction: immense influence within the housing market contrasted with dwindling share prices. The revenue for the recent quarter hit a staggering $30.29B, yet the stock lingers around distressing lows.

The key numbers paint a vivid picture. The profit margin is notably weak, and return on equity remains negative. Most glaring is the Price-to-Book ratio, shedding light on the market’s undervaluation of FNMA shares, potentially hinting at an underlying opportunity for bold investors.

Delving into FNMA’s detailed balance sheet, the sheer magnitude of their assets—$4.33T—contrasts sharply with staggering liabilities. This balance demonstrates the behemoth that is Fannie Mae yet invites scrutiny on financial stability.

Analysing FNMA’s Stock Trajectory

In the past month, FNMA’s stock movement reveals a gradual, albeit steady, decline. Trading prices fluctuated from highs above $6.9 to recent lows near $5.10. The prevailing bearish sentiment seems aligned with market fears regarding governmental policy impacts and potential shareholder dilution amid privatization efforts.

The share price trajectory suggests market turbulence woven into FNMA’s fabric as external economic pressures, like elevated interest rates, exert downward force on trading assets.

Reflecting on the News

Examining the fuel behind FNMA’s recent market narrative, a collection of strategic shifts and economic indicators rise to prominence.

Analyst’s Revised Stance:

Brian Violino’s decision to adjust FNMA’s price target upward reflects an acknowledgment of incremented investor willingness and refreshed regulatory alignments. Nonetheless, the underlying caution signals persistent threats regarding capital requisites and dilution—a dual-edged sword guiding FNMA’s perceived value.

Regulatory Concerns and Privatization Hurdles:

Amidst fervent market attention, Keefe Bruyette’s downgrade steers focus toward looming dangers of failed privatization maneuvers. Crucially, uncertainties prevail as FNMA navigates an intricate landscape of implicit guarantees and controversial capital level agreements.

More Breaking News

Economic Influence of Treasury Yields:

Intersecting this corporate saga, the soaring 10-year Treasury yields elevate mortgage rates, directly impacting FNMA’s core business. Consequently, existing home sales stagnate, leading to adjustments in future forecasts for property appreciation and market size.

Ultimately, Fannie Mae’s predicament encapsulates a supreme balancing act between aspiring growth and contending forces that keep traders on edge. The stock’s near-future fate hinges on mastering these challenges within the housing sector and the intricacies of policy change. As millionaire penny stock trader and teacher Tim Sykes says, “Be patient, don’t force trades, and let the perfect setups come to you.”

So, is it the right move to cut losses on FNMA shares? Traders weary of prolonged uncertainty might find this prudent, while others dauntlessly hunt beneath the surface, hoping for resurgence where challenges abound.

This is stock news, not investment advice. Timothy Sykes News delivers real-time stock market news focused on key catalysts driving short-term price movements. Our content is tailored for active traders and investors seeking to capitalize on rapid price fluctuations, particularly in volatile sectors like penny stocks. Readers come to us for detailed coverage on earnings reports, mergers, FDA approvals, new contracts, and unusual trading volumes that can trigger significant short-term price action. Some users utilize our news to explain sudden stock movements, while others rely on it for diligent research into potential investment opportunities.

Our traders will never trade any stock until they see a setup they like. Their strategy is to capture short-term momentum while avoiding undue risk exposure to a stock’s long-term volatility. This method is especially useful when trading penny stocks or other high-risk equities, where rapid gains can be made by understanding stock patterns, manipulation, and media hype. Whether you are an active day trader looking for key indicators on a stock’s next move, or an investor doing due diligence before entering a position, Timothy Sykes News is designed to help you make informed trading decisions.

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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

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Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”