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Amigo Shares Have Barely Moved Since December, When Will They Break Out?

Simon Mugo trader
Updated 12 Jan 2021

Practice Stock Trading
Amigo loans logo

Shares of Amigo Holdings PLC (LON: AMGO) have been trading sideways since December after the sub-prime lender stopped all new lending in November promising to restart lending in early 2021, but is yet to announce when this will happen.

The guarantor loans specialist’s last major announcement was the unveiling of a plan to cap the compensation paid out to aggrieved customers to ensure the company’s future survival.

Amigo unveiled a scheme of arrangement that would see it contribute monies to a scheme to meet customer refund claims, many of which are being made by claims management companies on behalf of their clients.

Investors were pleased to hear the lender say that it is in good financial shape, but this could change if it does not cap the money spent on payouts to aggrieved clients.

Turning to Amigo’s price chart, we can see that the company’s shares are trading near a medium-term support level with major support just a few pence away. The setup favours a bullish breakout, which is also supported by the fundamental picture.

Amigo shares are likely to spike higher if the company announces that it has started lending again or that the scheme to cap payments to aggrieved customers has received the necessary approvals from customers and the UK’s FCA.

A positive announcement from the company could trigger a major rally in its stock price. There is also growing consensus among analysts that demand for Amigo’s loan products has risen due to the coronavirus lockdown that has left many without jobs.

Amigo Loans share price.

Tradingview chart of Amigo Loans share price 12012021

Since December, Amigo Loans have been trading sideways due to the lack of significant catalysts to move the stock in a particular direction.

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading