The MoneyMe Ltd (ASX: MME) share price has been on form on Thursday.
In afternoon trade the online lender’s shares have zoomed over 16% higher to an all-time high of $1.75.
When its shares hit that level, it meant they were up 40% since its IPO late last year.
Why is the MoneyMe share price storming higher?
Investors have been buying the company’s shares following the release of a trading update which revealed strong momentum across key metrics since its IPO.
According to the release, gross loan originations were up 85% on the prior corresponding period during the first half of FY 2020. This was higher than management’s expectations for a 62% increase.
Pleasingly, this positive momentum has continued in January. Combined with its strong customer acquisition, MoneyMe’s unaudited gross loan book increased to ~$133.8 million at the end of January.
Impressively, this represents 94% of the full year FY 2020 prospectus forecast of $141.9 million. As a result, management is confident that its closing gross loan book will materially exceed its prospectus forecast.
Another positive is that MoneyMe revealed that it has not compromised on quality in order to drive this growth.
It confirmed that the underlying characteristics of the loan book (such as credit quality and margin) are consistent with or exceed its prospectus assumptions.
In fact, loan provision to gross loan book (%) and realised losses are expected to perform better than planned. And the portfolio’s weighted average interest rate continues to track in line with the prospectus assumptions.
Management also hasn’t increased its spending to drive the growth. It advised that the loan book growth has been achieved with sales and marketing costs remaining in line with its prospectus forecast. It believes this demonstrates MoneyMe’s positive operating leverage.
Online lending rival Prospa Group Ltd (ASX: PGL) isn’t faring as well today. Its shares have fallen 1.5% this afternoon.
The post MoneyMe share price surges 16% higher after smashing its forecasts appeared first on Motley Fool Australia.
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