Shares in peer-to-peer lender Funding Circle made steps towards recovery today after plummeting as much as 29 per cent yesterday after it slashed its revenue projections in half.
The fintech’s stock recovered by more than eight per cent today to 125p following yesterday’s trading update that said full year revenue growth is now expected to be 20 per cent, compared to a previous forecast of 40 per cent.
However, shares were still below the pre-announcement price of 163p and considerably below the initial public offering price of 440p.
Funding Circle blamed the slump in revenue growth on a reduced demand for loans due to an increasingly uncertain economic outlook.
Samir Desai, Funding Circle chief executive and co-founder, said yesterday: “The uncertain economic environment has reduced demand from small businesses and led us to proactively tighten lending criteria.
“As a result, revenue growth will be impacted. We recognise that this is a change from our previous guidance, but we are taking the prudent course of action for the long-term growth and development of our business.”
Analysts said the share price plunge was “brutally punishing” for investors who took part in the IPO.
“The business is unprofitable and it looks like being so for a little while longer,” Helal Miah, investment research analyst at The Share Centre said.
“Funding Circle remains a share for the brave Investor and one we prefer to avoid.”