We would love to hear your thoughts about our site and services, please take our survey here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
They could sell the US business for a pound as it would be immediately earnings enhancing . The US business is loss making so whatever they get for it will be a bonus. Pretty exciting business model now and it’s all coming together nicely with the £25n buy back too
Any ideas as to sell value of the US business?
I wonder if they have bought in any shares yet for cancellation .
Funding Circle, a prominent fintech firm specialising in small business lending, announced today a strategic shift in its operations aimed at curbing losses and revitalising its share value. Alongside its release of full-year results, the London-listed company unveiled plans for a £25 million share buyback initiative and disclosed intentions to divest its struggling US division.
The firm’s decision to embark on a share buyback program signals a proactive approach to address its share price, which has seen a significant decline since its 2018 initial public offering (IPO). Funding Circle’s shares have plummeted by over 93% from its IPO valuation of approximately £1.5 billion, reflecting investor concerns amid mounting losses and operational challenges.
Funding Circle reported widened losses of £33.2 million in 2023, compared to a pre-tax loss of £12.9 million in the previous year. The expansion into the US market, coupled with investments in its lend-now-pay-later offering Flexipay, contributed to the deepening losses. In light of these developments, the company intends to refocus its efforts on its profitable UK business segment and explore options for divesting its US operations.
Lisa Jacobs, CEO of Funding Circle, emphasised the company’s commitment to maximising shareholder value by addressing the undervaluation of its shares. Jacobs stated, “We believe the share price materially undervalues the business and as such will be buying back up to £25m shares,” indicating confidence in the company’s prospects despite recent challenges.
The announcement of the potential divestment of the US arm follows indications of interest from potential buyers. Jacobs highlighted the need for substantial cash and capital to sustain growth in the US, prompting the company to reassess its strategic priorities and streamline its operations.
As Funding Circle shifts its focus towards its UK business, it aims to capitalize on its core strengths while optimizing operational efficiency. The company’s FlexiPay offering, which nearly quadrupled to £234 million in 2023, underscores the potential for growth in its home market.
Investors responded positively to the news, with Funding Circle shares surging by 22% in early trading following the announcement. The company’s proactive measures and strategic realignment signal a concerted effort to navigate challenges and position itself for sustainable growth in the evolving fintech landscape.
Institutional stake building into the bargain too. These guys are quietly going about their business accumulating monthly. 1. Solid results. 2. 164m of cash Vs 158m Mkt cap. 3. Flex Pay up 500% and growing. 4. £25m buyback. 5. US loss making business about to be sold. You get all this for nothing as cash is higher than market cap.
£214m cash at bank in hand. Unrestricted cash now over £160m which is more than market cap. 40m shares to be bought and cancelled so 360m shares at present will soon be 320m shares. US business about to be sold and update is pending. Flex pay growth off the charts. What a business model and you can buy at cash !!!
Really good volume and consolidation today, it will be interesting to see whether they have started the buyback or whether this is institutional investors shuffling their cards.
I make it around 270m shares with notifiable holders & sub 3% holders specificed on Simply Wall Street's register (who must get the data from Bloomberg, date unknown).
So if FCH buy back 40-50m with this £25m tranche then there will be very few shares left in circulation. Hopefully we'll break above 45p early next week, there were very few sellers on the book in the last hour and none in the closing auction, there was a buy for 450k shares at 42p though which went unmatched.
The flex pay is growing link stink and so everyone knows that model is all covered by personal guarantees so theres no risk to funding circle. This could triple in pretty sharp order
Yes of course as unrestricted cash is above mkt cap and the price doesn't even factor in how well the business is doing, growth etc - some large AT buys coming through
Buyback is just the cherry on the top
Out and out buy at 42p regardless of the buyback
Yes, Flexipay growth near quadrupled and is going from strength to strength. Mkt cap now below cash, this is ridiculously undervalued and the significant buyback puts this business in a strong position to propel the share price much higher and close the anomaly
I did say yesterday that Market makers in control and keep things under control.
Terrific set up for a multi bagger. Flex pay growth incredible
"With 25 million buys needing to be executed under 45p, I don't expect this stock to move much higher anytime soon. GLA"
What on earth does this mean? The price will only stay sub 45p if there are sellers out there to match the £25m buyback money flow + PI buying volume. The aim of the buyback is to increase the share price to fair value, which is clearly well north of the current price.
No surprise to see a little profit taking this afternoon, I suspect there will be a few US shareholders who will sell up with the US business being on the verge of disposal. But get the next few days out of the way & let the buyback do it's thing, I'll be amazed if an uptrend doesn't form.
I'm here for Flexipay growth, £256m of transactions from 6.5k businesses last year, and now they've introduced a Flexipay card to further aid business spending. The best part is that these products are interest free, so they should be extremely sticky and therefore valuable. £50m income by FY25 was the previous guidance, they are guiding for £24m for FY24 so that still looks attainable.
Very interesting to see where this goes over the next 12-24 months. Target price £1.50 based on them achieving 8p EPS in FY26.
Mkt cap at around unrestriced cash level, so business is in for free? No wonder management see this as significantly undervalued as share price does not reflect the growth in the underlying business
Group cash £221m of which £169m is unrestricted - so big anomaly as trading at around cash and so there is alot of headroom for rises, hence why the £25million buyback program has been initiated, don't foregt IPO around £4 and trading is very robust, particularly Flexipay business nearly quadrupling. I see a big rerate coming
I guess today's raise says a lot. Market makers aren't going to let the price rise easily now, as they control the market. With 25 million buys needing to be executed under 45p, I don't expect this stock to move much higher anytime soon. GLA
Thinking of a good exit price and I agree, this has legs to go to 60/70p very quickly.
The £25 million buyback is currently underway. Look at those large trades. I can sell my entire holding in one second for a premium price.
13:01:44 44.38182 100,000 44.38k O
12:01:24 40.77178 250,000 101.93k O
It has to make it between 70p-£1 I’m sure being watching this for such a longtime
Significant Buyback: A £25m buyback represents a sizable chunk (over 15%) of the company's current market cap. This can signal strong confidence from management in the company's future prospects.
Growth Potential: The Flexipay element adds to the appeal, implying possible increased revenue and growth for the company.
Potential Share Reduction: The buyback could eliminate a substantial portion of outstanding shares, leading to increased scarcity.
Average Trading Volume: Average daily volume appears sufficient to support the buyback without excessive market disruption.
Where Does Fair Value Sit?
This is the crucial question to answer! Here are some considerations:
IPO Price: While a useful reference point, the IPO price (£4) may not reflect current fair value. Market conditions, company performance, and sector changes all factor in since the initial public offering.
Management Actions: The magnitude of the buyback suggests they believe the shares are undervalued, hinting at where they believe fair value may lie.
Growth Estimates: Consider Flexipay's potential impact. Higher growth projections would usually justify a higher valuation.
ShearClass 👍
A £25m buyback on a share with a current market cap of £160m is highly unusual, add in the growth element via Flexipay and it becomes an even better opportunity.
I've just had a quick look at trading volume over the last 12 months, if we strip out the 19m shares traded on one day in mid Feb + 2 other high volume days where multi million block trades went through then total volume in the last 12 months was 50.9m shares. We can estimate total value traded by multiplying this by the daily close price, which gets you £21.9m.
If shares were to remain at the current 44p then the £25m buyback could sweep up 56.8m shares, reducing total share count to 305m. This volume of shares across a 260 day trading year equals 218k bought each and every day, vs the 204k average over the last 12 months (excluding the 3 days of block trades).
The main question is where do they think fair value sits? With the IPO price of £4 and no dilution since, it's surely a long way north of here...
Big buys landing now!