Shares in digital lender Plenti had fallen 30% year to date but they got around a third of that loss back on Wednesday when the company surprised with an earnings upgrade.
Plenti raised its forecast for cash net profit after tax for the six months to March to $2.2 million, up from $1 million previously – small beer compared to the giants like the major banks, but it was heartening news to the company’s small band of market supporters.
The shares leapt more than 10% to regain the $1 level by lunchtime Wednesday back where they had been in early March.
The upgrade, while not large in dollar terms, does suggest fintechs may have been oversold by investors who have lost confidence in their ability to make early profits.
Too many investors wanted instant results then got gloomy as rising inflation put upward pressure on interest rates which would make life tougher for fintechs.
In its release on Wednesday, Plenti said the improvement has occurred as its loan book expands slightly more quickly than it expected.
“Plenti’s upgraded Cash NPAT forecast would result in the Company achieving Cash NPAT profitability for the full FY22 financial year – a significant Company milestone,” the company said in its ASX release.
“Additionally, Plenti has already met its financial year loan portfolio target of $1.25 billion, with the current loan portfolio at approximately $1.275 billion,” the company added.
Plenti, formerly known as RateSetter, is battling in the markets for personal loans, car loans and renewable energy loans.
“We are pleased to be upgrading the forecast for our key profitability metric, as we believe profitability is the critical yardstick against which any business should be measured,” CEO Daniel Foggo said in Wednesday’s update.
“Our proprietary technology platform is delivering operating leverage as we scale while continuing to provide exceptional customer experiences, helping us take market share.”