The Amigo Holdings PLC (LON: AMGO) share price has risen by 21.6% in one month as investors patiently wait for the company to resume lending activities. The guarantor lending was given the green light by the UK’s Financial Conduct Authority (FCA) to resume lending activities on 14 October 2022.
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At the time, Amigo shares spiked higher following the announcement before falling back over the next few days. However, the shares turned higher at the beginning of November and have risen since then to recoup most of the losses that followed the initial spike higher triggered by the FCA decision.
The lender has since launched its RewardRate website, which seems operational, but there was no official communication from the firm that it had resumed lending activities. Instead, the company could be conducting a pilot lending program, which the FCA will closely monitor before it can resume full-fledged lending activities.
As mentioned in previous articles, demand for Amigo’s guarantor and personal loans has skyrocketed since the pandemic lockdowns ford many people to default on their loans after job losses and business closures. Many people are yet to recover from the financial impact of the pandemic lockdowns.
Amigo’s revised lending rates will likely appeal to a broader base of clients since it now offers lower interest rates. At the same time, the company now allows borrowers who repay their loans on time to get lower rates on future loans.
The rally in Amigo shares indicates investor confidence in the company’s prospects as many wait for the lender to announce its return to lending officially. However, investors should also remember that the firm must conduct a significant capital raise that will dilute existing shareholders by 90% if they do not participate in the capital raise.
Therefore, it might be advisable to buy amigo shares after the capital raise.
*This is not investment advice.
Amigo share price.
The Amigo share price has risen 21.6% in the past month as investors patiently await its return to lending activities.