In 2020, I am pretty sure that the share price will go back to $4-$8 or even less. Atlanticus Holdings is a small corporation, so it should not trade overvalued as compared to large peers for a long time.
- Atlanticus Holdings Corporation offers financial technology and related services.
- The current overvaluation is very significant. The company’s price/book value is unsustainable with a ROE of 20%.
- Many short sellers have been acquiring positions in the last six months, which, in my opinion, makes a lot of sense.
- Encore Capital Group, which has a Price/Book Value of 1.14x with a ROE of 20%. Atlanticus Holdings should not trade at more than 3x.
- I believe that there is a minimum downside of 40%.
Atlanticus Holdings (ATLC) has seen an increase of more than 225% in its stock price in less than one month. In my opinion, the current overvaluation does represent a magnificent short selling opportunity. The company’s price/book value is way larger than that of competitors. Also, Atlanticus’ ROE is not as significant as that of other large peers. I believe that there is a minimum downside of 40%. If, in 2020, the company needs to obtain additional financing or raises equity to pay its financial obligations, the share price would decline.
Business, Interest Charged And Sources Of Financing
Atlanticus Holdings Corporation offers financial technology and related services. The company’s business is divided into two business segments: Credit and Other Investments, and Auto Finance.
In the nine months ended September 30, 2019, more than 90% of the total amount of assets are related to the Credit and Other Investments business segment. Besides, in the same period of time, the Credit and Other Investments (“COI”) business segment was responsible for more than 86% of the total net interest.
Disclosure: No Positions On Atlanticus Holdings Corporation