Hi David,
The reason for the drop over the past few days is because of the proposed changes imposed by the Federal budget. Under new proposed rules, max interest rate companies can charge would drop to 35% (down from 47% current). This mainly impacts alternative lenders like GSY who at times, charge a high rates for those with poor or no credit. GSY has come out with some statements and here are some key points.
- the weighted average interest rate on the Company’s consumer loan portfolio is approximately 30% per annum
- 36% of the Company’s consumer loan portfolio carries a rate of interest greater than 35% per annum, of which the weighted average annual interest rate on those loans is 42.5% per annum
- It is expected to impact potential growth although EPS is still expected to rise YOY even it was a hard change today.
A bunch of analysts have come out and downgraded the stock post this announcement. NOt surprising since they are now expected to generate lower growth.
Here is GSY's full response: https://finance.yahoo.com/news/goeasy-ltd-provides-federal-budget-034600844.html
Right now we are in wait and see mode and the company is expected to provide new guidance with next quarter's results.
Mat