Credit Corp Group Limited [ASX:CCP] shares are trading at $18.50 at time of writing, a gain of 6.16% for the day.
The rise comes in spite of a sudden fall last week, after Credit Corp responded to a negative analysis report calling its business into question.
The lender and debt collector went into a trading halt late last week, as it was concerned it would face suspension by the ASX. While the share price did fall significantly after coming out of the trading halt, the rebound since then has almost been enough to bring it back to last week’s highs.
Why is Credit Corp now back up by 6%?
Credit Corp called the trading halt on Thursday after receiving a short-seller report from ‘Checkmate Research’, which led to a fall in the share price by 12% on Friday.
The anonymous report, titled ‘Credit Corp: A wolf in sheep’s clothing’, alleges that the company is engaging in unethical behaviour by avoiding classification as a payday loan provider.
The report also accuses of Credit Corp of ‘earnings management’ and of providing loans to the unemployed and those without a realistic capacity to repay debts.
Chief Executives Thomas Beregi and Michael Eadie were quick to reject the accusations, stating in their response:
‘Credit corp competes with “pay-day” lenders to provide consumers with a better alternative…Credit Corp’s loans feature a much longer duration than a” pay-day” loan.’
In their response, Credit Corp have asserted that their actions are legal and they continue to act as a responsible lender:
‘The report confuses our encouragement of applications with our loan approval criteria. The fact that we encourage applications from a wide population says nothing about the individuals we approve.’
What’s the future like for Credit Corp?
The company is predicting strong performance for 2018, with further market gains expected. It seems that after a short panic, the report did not have the dramatic effect its creators were expecting, and investors do not appear to have been put off by it.
Given the recent wobble, Credit Corp will no doubt continue to benefit from the positive sentiment — at least until Checkmate is done completing their next report.
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PS:Credit Corp may be recovering from last week’s falls, but Markets & Moneyeditor Vern Gowdie has found five other stocks that he believes could be ripe for a fall. And if he’s right, they won’t recover as quickly as Credit Corp has. He explains why in his free report, ‘Five Fatal Stocks You Must Sell Now’. Download your free copy here.