Fannie Mae experienced a severe market setback on Thursday as its stock price collapsed by 13.9 percent, wiping out recent gains and settling in the $9.50 to $9.60 range. The dramatic sell-off was primarily triggered by comments from Pershing Square CEO Bill Ackman, a major shareholder in the government-sponsored enterprise.
Investor Warning Disrupts Privatization Timeline
Bill Ackman delivered a sobering assessment to market participants, explicitly warning via platform X that Fannie Mae remains “far from ready” for a conventional initial public offering. This statement directly contradicted the government’s aggressive push for privatization by late 2025 or early 2026. The prominent investor argued that capital markets require transparent financials and stable regulatory conditions before such a substantial offering could succeed.
Instead of rushing toward an IPO, Ackman proposed an alternative pathway: the U.S. Treasury should first exercise its warrants and relist common shares on the New York Stock Exchange. This approach would facilitate more accurate price discovery but would inevitably extend the privatization timeline well beyond what speculators had anticipated.
Governance Crisis Compounds Market Worries
Compounding investor anxiety, a developing governance crisis has emerged following reports that multiple senior ethics and compliance officers were recently terminated. The dismissals are connected to an internal probe examining allegations that sensitive mortgage data was improperly shared with competitor Freddie Mac under direction from political leadership.
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This “ethical cleansing,” as some Wall Street observers have termed it, has created significant uncertainty about the company’s oversight mechanisms. When internal controls appear compromised by political objectives, investors immediately demand higher risk premiums, creating turbulent conditions where governance deficiencies overshadow operational performance.
Strong Fundamentals Overshadowed by Political Uncertainty
Despite the negative sentiment, Fannie Mae’s operational performance remains robust according to recent financial disclosures:
- Net Income: $3.9 billion in the third quarter, representing a 16 percent increase over the previous quarter
- Capital Building: Retained earnings are being used to reduce the regulatory capital shortfall of approximately $25.4 billion
- Market Response: Solid fundamental performance is being completely ignored as investors focus exclusively on political and regulatory developments
Technical Damage Signals Further Weakness
Thursday’s trading session marked the most severe single-day decline in years, highlighting the fragility of current valuations. From a technical perspective, the stock suffered significant damage as it breached the crucial $11.00 support level. This breakdown opens the door to further declines, with the $9.00 mark now representing the next potential support zone.
Market analysts suggest that if U.S. authorities adopt Ackman’s “listing before IPO” strategy, share prices might stabilize as institutional investors would likely view this as a more measured approach to preserving value. However, any additional headlines regarding internal investigations could maintain downward pressure on the stock, keeping it firmly in correction territory for the foreseeable future.
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