What Happened?
Shares of digital banking company Axos Financial (NYSE: AX) fell 2.8% in the afternoon session after the company reported third-quarter 2025 earnings that, while beating analyst expectations on profit, showed flat year-over-year sales. The digital banking company posted adjusted earnings of $2.07 per share, surpassing the consensus estimate of $1.88, while revenue of $323.4 million also narrowly beat expectations. However, investors appeared to focus on several underlying weaknesses. The flat year-over-year revenue growth signaled a potential slowdown. Additionally, the company's tangible book value per share, a key metric for banks, missed analyst estimates. Its efficiency ratio, which measures operational performance, also fell short of expectations and worsened compared to the same quarter last year. These negative factors seemingly overshadowed the headline beats, leading to investor concern about the company's growth and profitability.
The shares closed the day at $78, down 1.4% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Axos Financial? Access our full analysis report here.
What Is The Market Telling Us
Axos Financial’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 15 days ago when the stock dropped 6.6% on the news that disclosures from two lenders raised concerns about deteriorating loan quality across the industry. The drop was triggered by specific incidents that have spooked investors. Zions Bancorp announced a $50 million charge-off—a debt the bank doesn't expect to collect—on a single loan. Separately, Western Alliance Bancorp revealed it was dealing with a borrower who had failed to provide proper collateral. These events are compounding existing anxieties about the regional banking sector, which is already under pressure from elevated interest rates and declining commercial real estate values. The news heightened investor concerns that more cracks could appear in borrowers' creditworthiness, potentially leading to increased loan losses and reduced profitability for other banks in the sector.
Axos Financial is up 13.3% since the beginning of the year, but at $77.98 per share, it is still trading 15.5% below its 52-week high of $92.31 from August 2025. Investors who bought $1,000 worth of Axos Financial’s shares 5 years ago would now be looking at an investment worth $2,737.
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