Amigo Share Price Rises to 29p – Its Highest in Over 1 Year

Controversial sub-prime lender, Amigo Loans, is seeing a huge resurgence of its share price, suggesting more shareholder optimism following a tough 2020 riddled with customer compensation claims.

The company’s share price is a far cry from its 270p price in 2019, but almost dropping to 0p last year, it has rallied strong in recent weeks and it is at an annual high of 29p – and it is growing.

 

amigo share price

 

The year 2019 and 2020 saw Amigo overwhelmed with compensation claims from historical customers, requesting refunds for loans that were not affordable or did not include full affordability checks on the individual borrower and their guarantor. The result saw Amigo refund over £50 million worth of compensation to former customers, overseen by the Financial Ombudsman, which consisted of the full loan amount, interest and 8% compensation on top.

The covid-pandemic also saw the company stop lending during the first lockdown, as pursued by most private lenders, and they were required to offer repayment holidays for customers, in line with the FCA guidelines.

 

What is Fuelling Amigo’s Share Price Recovery?

After recently presenting their case in court, Amigo have agreed to refund around 5% to 10% of their outstanding claims to customers, totalling around £35 million. The move was not halted by the Financial Conduct Authority, something that has given the company confidence to resume lending and operating, whilst dodging what could have been an expected file for administration.

Furthermore, a leading sub-prime lender, Provident, has filed for administration and has stopped lending. The specialist doorstep lender is the main competitor to Amigo in this space and their fall might be Amigo’s gain. Provident have also confirmed that they will be refunding around 5% to 10% of outstanding claims.

 

Is it Too Late To Buy The Share and Ride This Wave?

No, it is not too late to buy Amigo shares whether you use IG.com, other trading platforms or private stock brokers. However, some might consider this proposition a little too risky given the recent turbulence and fluctuations for short term lenders and across the sub-prime lending industry.

Stuart Blair of Yahoo Finance wrote:

 I’m not convinced that the Amigo share price will be able to rise much further. The subprime lending industry is evidently struggling and there is the chance that the company will have to file for administration. This makes Amigo shares too risky for me.