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Post by Mr Smith on Jun 13, 2019 10:09:24 GMT
Hi.
i'm new on here but just wanted to start a thread on the FC share price.
It's worth keeping an eye on as it pretty much shows what the city institutions think of the company and its future prospects.
Peak price since IPO around 440, now sitting at 245, so down approx 45%.
It's down from the start of March though when many on here started posting about default rates/removal times etc.
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dorset
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Post by dorset on Jun 13, 2019 11:04:18 GMT
Been said before that the only sure way of making money out of FC is to short the share price.
I said this is a post some time ago when the share price was at about 330p.
Could go a lot lower than 245p when the problems lurking in the depths of the loan book see the sunlight.
Another default 35453 today making four for me so far in June and 48 for the whole of 2019. I'm £16 in profit for the ytd.
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Post by Mr Smith on Jun 13, 2019 11:30:07 GMT
Worth noting, if you short it and it goes to 0, you get 0.
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alanh
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Post by alanh on Jun 13, 2019 12:44:15 GMT
That is completely wrong. If you short it at 245p and it goes to zero then you get 245p.
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Post by Mr Smith on Jun 13, 2019 13:21:59 GMT
That is completely wrong. If you short it at 245p and it goes to zero then you get 245p. That should have read...you get 0 profit.
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alanh
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Post by alanh on Jun 13, 2019 13:28:55 GMT
Your profit is the difference in price between what you shorted it at and the price you buy it back at. If you sold it at, say, 245p and it goes to zero then your profit is 245p. If you bought it back at 100p then your profit is 145p.
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benaj
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Post by benaj on Jun 13, 2019 13:38:53 GMT
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Post by Mr Smith on Jun 13, 2019 14:12:10 GMT
Your profit is the difference in price between what you shorted it at and the price you buy it back at. If you sold it at, say, 245p and it goes to zero then your profit is 245p. If you bought it back at 100p then your profit is 145p. Sorry, I stand corrected
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Post by shanghaiscouse on Jun 14, 2019 8:59:43 GMT
If you think about it, how does FC make money? By skimming off their fee from gross interest paid. They aren't exposed to any of the bad debts on their lending. So for them, the incentive is to grow loans as much as possible to maximise their fee. The only incentive they have to recover bad debts is an indirect one, a bad debt is not going to hit their bottom line directly, only indirectly over the medium term as their brand suffers and they attract less funds as it is seen as more risky. Personally I think this is a very unhealthy set of incentives. So the only way for the share price to go up is for them to increase the size of the loan book, which means offerring ever more risky loans, or by cutting their costs which means reducing the amount of diligence in the underwriting process. Of course, they could also move out of central London. For me, the biggest risk is when you look at the people working there (look at their twitter feed) I don't see the kind of people that I would trust to really fight for me. I see lots of young kids playing ping pong.
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reinvestor
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Post by reinvestor on Jun 25, 2019 15:30:45 GMT
Share price has just closed at a new low of 214p after losing almost 9% today.
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coop
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Post by coop on Jun 25, 2019 15:38:33 GMT
If you think about it, how does FC make money? By skimming off their fee from gross interest paid. They aren't exposed to any of the bad debts on their lending. So for them, the incentive is to grow loans as much as possible to maximise their fee. The only incentive they have to recover bad debts is an indirect one, a bad debt is not going to hit their bottom line directly, only indirectly over the medium term as their brand suffers and they attract less funds as it is seen as more risky. Personally I think this is a very unhealthy set of incentives. So the only way for the share price to go up is for them to increase the size of the loan book, which means offerring ever more risky loans, or by cutting their costs which means reducing the amount of diligence in the underwriting process. Of course, they could also move out of central London. For me, the biggest risk is when you look at the people working there (look at their twitter feed) I don't see the kind of people that I would trust to really fight for me. I see lots of young kids playing ping pong. Regarding your last point - I think this underlines the fact that FC, and a lot of others, are more "Tech Bros" than they are financial institutions, in terms of their outlook and experience.
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dorset
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Post by dorset on Jun 25, 2019 15:41:26 GMT
There you are if you had taken notice of my "shorting" pearls of wisdom on the 13th June you would now have pocketed 12.5% after only two weeks.
IMO possibility of 150p per share by year end or sooner.
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mikeh
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Post by mikeh on Jun 25, 2019 16:01:55 GMT
There you are if you had taken notice of my "shorting" pearls of wisdom on the 13th June you would now have pocketed 12.5% after only two weeks. IMO possibility of 150p per share by year end or sooner. I agree 150p is highly likely although I wouldn't like to put a timescale on it. It's difficult to see how they will ever make a profit which is going to make their next fundraising challenging. One thing's for sure - they are not interested in P2P anymore. More like I2B, Institutions to Businesses.
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bigfoot12
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Post by bigfoot12 on Jun 25, 2019 23:24:54 GMT
If you think about it, how does FC make money? By skimming off their fee from gross interest paid. They aren't exposed to any of the bad debts on their lending. So for them, the incentive is to grow loans as much as possible to maximise their fee. The only incentive they have to recover bad debts is an indirect one, a bad debt is not going to hit their bottom line directly, only indirectly over the medium term as their brand suffers and they attract less funds as it is seen as more risky. Personally I think this is a very unhealthy set of incentives. So the only way for the share price to go up is for them to increase the size of the loan book, which means offerring ever more risky loans, or by cutting their costs which means reducing the amount of diligence in the underwriting process. Of course, they could also move out of central London. For me, the biggest risk is when you look at the people working there (look at their twitter feed) I don't see the kind of people that I would trust to really fight for me. I see lots of young kids playing ping pong. By skimming off their fee from gross interest paid. At the very best that is unhelpful language, but in fact makes you sound like some sort of anti capitalist. How do you expect them to make money? This is P2P we are lending, we have to be taking most of the risk. The FCA don't like most 'skin in the game' arrangements as it complicates possible conflict of interest. And yet FC have to make some money somewhere, or why bother? They aren't exposed to any of the bad debts on their lending. They might not be exposed to the same capital losses, but as per your previous statement there is a financial hit with if a loan turns into a loss. The rest of your logic is unconvincing, however, I exited (when they removed the loan book), so I don't disagree with your sentiment, just your logic.
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Post by shanghaiscouse on Jun 26, 2019 13:30:11 GMT
My point is that it is a very unhealthy set of incentives. The amount of money they make is proportionate to the amount of loans they can write. If a loan goes bad they don't take a capital loss. Its very different to a bank. I don't think I am anti-capitalist, just growing more anti- this particular business model which has a heightened moral hazard. I have several loans in my portfolio which clearly should never have been made, the worse being a TV repair company in Scotland that operates out of literally a shack but was given £350,000 in July, only to go into liquidation in October. No lender who had their own capital at risk would ever have lent so much without even visiting the borrower. And that is not an isolated case.
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