FTSE extends bull-run and Funding Circle disappoints yet again

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“The FTSE 100 continued yesterday’s bull-run with a further 0.2% gain to 7,515. Stocks have been rising on renewed hopes of a US-China trade deal and headlines like ‘US equities hit a new record high’ have certainly helped to improve investor sentiment,” says Russ Mould, Investment Director at AJ Bell.

“Tuesday saw insurers in strong demand on the London market with Hiscox and RSA among the biggest risers. Chemicals group Croda was the biggest faller.

“Gold continued to ease back following its recent rally. The precious metal tends to be in demand when investors are worried about the world, so it is understandable that demand wanes when investors regain optimism."

Funding circle

Funding Circle was pitched as a fast-growth business when it floated on the stock market last year, providing investors with access to a global small business loans platform.

“The reality has been far less attractive. Investors have actually been treated to a punishing fall in the share price, down 70% since IPO to 130p, and the revelation that revenue growth will only be half of the 40% previous guidance.

“In March chief executive Samir Desai said the business was confident of meeting its growth expectations for the year. Sadly demand for loans has fallen and the company has decided to delay a launch in Canada.

“One of the worst crimes a company can commit is failing to deliver on promises set out at its IPO. They lose credibility with the market and find that investors no longer want to support the business.

“Funding Circle is now in this territory and it may take a long time to win back the market’s favour.

“Tightening the lending criteria is probably a good move as it will reduce exposure to higher risk loans and potentially lower the amount of bad debt. But this is also likely to further temper growth.

“Funding Circle has bold ambitions yet being conservative with its growth plans has to be a better strategy than being all guns blazing just to become the market leader.

“Going too fast presents significant execution risks and scope for major disappointments. Funding Circle should have learned its lesson by now, given how it hasn’t been awash with good news since being a listed company.”

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