Short seller actions can have a negative impact on a stock but when that short seller is Hindenburg Research, the impact can be massive. Unfortunately, this has been the case for Axos Financial’s (NYSE:AX) shares, which crumbled by over 12% at the opening bell today following a short report from Hindenburg.
Hindenburg’s Latest Target
Axos Financial is a holding company for Axos Bank, Axos Clearing, and Axos Invest. AX had nearly $22.6 billion in consolidated assets at the end of March. Its Clearing unit had roughly $35 billion in assets under custody at the end of March.
Hindenburg has alleged that Axos is exposed to highly risky asset classes due to lax underwriting standards. The short seller highlighted that Axos is trading at a premium valuation, which implies that it has thrived in an environment where a number of its peers are struggling.
In addition, it believes that the company’s loan book is filled with glaring problems and is highly exposed to worsening commercial real estate market trends. Moreover, Hindenburg is also short on Axos stock. Shares of the company are currently trading at a price-to-earnings multiple of 7.1.
Is AX Stock a Buy, Sell, or a Hold?
Today’s sharp correction has pushed Axos shares nearly 16% lower year-to-date. Overall, the Street has a Strong Buy consensus rating on the stock, alongside an average AX price target of $70. However, analysts’ views on Axos could see changes following Hindenburg’s actions.
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