3 monopolies, down as much as 62%. Which of them is the market writing off too soon?
FICO is earning more than ever, and yet it is 62% below its peak. Baidu and Pinterest are falling for the same reason: the market has stopped believing their privilege will last. But only one of them has the numbers to back that up.
Key points
Three profitable companies with dominant positions are among the market’s hardest-hit stocks this year
The steepest fall is for the one with the highest margin of the three, 51.7%, and it is 62% below its yearly high
The head of a U.S. mortgage agency is publicly discussing one of these monopolies on X
One of these companies is worth less than the book value of its own assets, despite holding over 40 billion USD in cash
All three companies will report results within three weeks, and each has something different at stake
The market does not pay for a monopoly, but for how long it will last
Investors usually pay a premium for a company that dominates its market. This year, however, they are doing the opposite: three profitable companies with dominant positions are among the hardest-hit stocks, not because of what they are reporting today, but because of what they could lose tomorrow. FICO $FICO faces a regulatory threat, Baidu $BIDU faces a breakdown in its advertising business, and Pinterest $PINS faces fears that people will look for inspiration through AI chatbots instead of its app.
Company | Price on Oct. 26 | Yearly high | Down from high | P/E |
|---|---|---|---|---|
FICO | 708.07 USD | 1,858.91 USD | -61.9% | 18.7 |
Baidu | 77.85 USD | 165.30 USD | -52.9% | loss over 12 months |
21.23 USD | 34.54 USD | -38.5% | 48.3 |
Notice the paradox: the company with the best numbers is falling the furthest. FICO has an operating margin of 51.7%, by far the highest of the three, and yet it has lost the most. That is because the market is pricing not today’s earnings, but the number of years the monopoly can still generate them. And each company faces a threat at a different stage.
Down 62%: the mortgage monopoly the regulator is discussing publicly on X
Monday, October 26, was another dark day for FICO. The stock fell 13% to 708.07 USD after Federal Housing Finance Agency (FHFA) chief Bill Pulte wrote on X that the agency would take “further steps this week to make competition real, not fake or manipulated.” He was responding to Friday’s news that FICO had frozen the price of its mortgage score at 10 USD. In 2022, a single score cost less than a dollar; its competitor VantageScore costs about 0.99 USD today.
The price freeze was a defensive move. On September 29, FHFA had already announced that Fannie Mae and Freddie Mac would switch to a uniform pricing schedule for both FICO and VantageScore, sending the stock to its worst day since 1989, with a 27% drop. The score used for practically every U.S. mortgage now has a viable alternative for the first time in three decades.
But the threat is not yet visible in the financial statements. For the third fiscal quarter, FICO reported revenue of 674 million USD, up 26% from a year earlier, while revenue from mortgage scores rose 97%. Mortgages account for 62% of the entire scoring segment—that is exactly the part the regulator is targeting. CEO Will Lansing was asked directly by analysts whether banks were stopping their FICO score pulls:
“And to your specific question, whether we’re seeing a decline in volumes? No, we’re not, which suggests they’re pulling both scores.”
William Lansing, FICO CEO
The market now values FICO at 18.7 times earnings, compared with a five-year average of 52. It also looks cheap versus Bulios’ fair value of 874.59 USD. But the company itself says in its annual report that reduced use of its scores by Fannie Mae and Freddie Mac would have a significant impact on revenue and the stock price, and it carries 5.6 billion USD in debt against 248 million USD in cash. The November 4 results will show whether “pulling both scores” is starting to turn into customers leaving.
Down 53%: here, the threat is no longer a fear but a line item in the financial statements
With Baidu, there’s no need to speculate. Advertising revenue, the main source of income for China’s leading search engine for two decades, fell 19% in the second quarter of 2026 to 13.1 billion RMB, while total revenue fell 4% to 31.3 billion RMB. The stock lost 13% in a single day after results on August 18. While the market fears the future for FICO, with Baidu it is looking at the past.
On the other side of the financial statements, the AI business is growing: 12.5 billion RMB (+25%), half the revenue of the core business, and GPU cloud is up as much as 283%. Apollo Go robotaxis are driving without a safety driver in Dubai and testing in London with Uber and Lyft. But the transformation costs money: over the past 12 months, free cash flow was -10 billion RMB, resulting in a net loss of 3.7 billion RMB. Its cushion of 283.1 billion RMB (41.7 billion USD) in cash and investments can fund the transition, but shareholders’ patience is not infinite.
“While our online marketing business remains under pressure, the growing momentum of our core AI business confirms Baidu’s transformation from an internet-based company into an AI-first company and strengthens our confidence in its long-term growth potential.”
Robin Li, Baidu co-founder and CEO
Bulios’ fair value of 78.46 USD is practically the current price. The market does not see Baidu as cheap, but as fairly valued—a company whose one business is shrinking faster than the other is growing. A P/B ratio of 0.6 says the same thing: the stock costs less than the book value of its assets, which happens to companies whose future the market does not believe in.
Down 38%: a threat that exists only in investors’ minds for now
Pinterest is the third case. On February 13, 2026, the stock hit a low of 13.84 USD after the company issued a weaker outlook and Citi analysts warned that AI tools from Google and Meta could take search traffic away from Pinterest. Since then, the price has risen 53% to 21.23 USD, including 12% in the past month alone. So the market began letting go of its concerns before they had a chance to be confirmed.
The numbers do not confirm them, either. In the second quarter of 2026, revenue grew 18% to 1.18 billion USD, marking the eleventh consecutive quarter of double-digit growth, and a record 640 million people use the app monthly, performing around 80 billion searches on it. The company is also aggressively buying back its own shares, with activist fund Elliott among its shareholders.
“AI is at the core of our momentum and a clear accelerator for our business. It is trained on our unique human curation of style and taste, making Pinterest more personal and actionable for users while also improving performance for advertisers.”
Bill Ready, Pinterest CEO
A P/E of 48 looks expensive at first glance. But Pinterest generated 1.6 billion USD in free cash flow over the past 12 months on a market capitalization of 12 billion USD, a yield of 13.2%. That is how companies in decline are usually valued, not companies growing 18%. Bulios’ fair value of 28.96 USD is 36% higher. Results are due on October 29, two days after this article is published.
Three dates that will determine who has lost a business and who has only lost the market’s confidence
Oct. 29. Pinterest: revenue growth in the U.S. and Canada, and the outlook for the holiday quarter. A slowdown below 15% would suggest that AI shopping assistants from ChatGPT and Google are starting to eat into those 80 billion searches. Growth above 18% would leave the concern unproven.
Nov. 4. FICO: mortgage-score volumes and FHFA’s promised “further steps.” The first mention of a decline in score pulls would mean regulatory risk had turned into an actual loss of revenue. What matters is how quickly banks switch to VantageScore, not the price of a score.
Nov. 17. Baidu: whether advertising is falling more slowly than 19% and AI cloud can sustain growth of around 50%. If AI revenue overtakes advertising before the cash runs out, the market will have to revalue the stock.
Only Baidu’s threat is backed up by numbers today. For FICO, the regulator has confirmed the threat, but the financial statements have not. For Pinterest, nothing confirms it except nervousness. And yet the riskiest bet is on the most profitable of the three: FICO does not sell a product customers love, but one they had to use. Once that “had to” disappears, a margin above 50% has nothing to support it.
