Analysts say there may be an opportunity for two-way trading in the stock, and investors must look at the issue with wide eyes, and is Amigo stock worth buying?

Introduction to Amigo

Amigo is a company listed on the London Stock Exchange under the ticker symbol AMGO.。The company is one of the most high-profile operators in the guarantor lending space, and its aggressive advertising campaign means it quickly took market share。That's good news for investors, as the company offers short-term loans at nearly 50% APR and are guaranteed by a more solvent third party.

The company's developments and policies also came to the attention of regulators in 2019, when the number of complaints against the company began to pile up and allegations of mis-selling began to surface.

Amigo's problems began when many borrowers were unable to repay their loans.。In addition, cross-transactions to recover funds from friends or family members of the guarantor did not proceed as planned。After the Financial Conduct Authority stepped in, after an in-depth investigation, the company's business and share price were where they are today

Bad debts on the company's books not only put the company in the spotlight of the authorities, but also tainted its financial statements。The company's share price fell 93% between April 2019 and March 2020 as investors rushed out of the market。COVID-19 has raised concerns about bad debts and the FCA investigation has led to court cases, and the share price has failed to recover and has been below the 30p level since April 2020

There is no guarantee that the stock price will recover, and Amigo's board of directors has been adjusted to put the company in the best condition it can hope for. New investors are likely to buy at the bottom price, but the company itself has declared bankruptcy risk.

Amigo Holdings Major Events

May 2020 - High Court judge dismisses company's restructuring plans。The SoA (plan of arrangement) was agreed by a majority of creditors, but the judge found the deal to be too "take it or leave it" in nature and overturned any claims by the majority of customers, i.e. 5-10 per cent of the value of the loan.。Amigo shares fall from 30p to 7p in a matter of weeks after being temporarily suspended and trading resumed

August 2020 - Rival Provident Financial, which faces a similar dilemma with Amigo, wins support for its own plan in the High Court, although the FCA has "serious concerns" about the proposal.

8 August 2021 - In early August, it was reported that Amigo had appointed investment bankers from PricewaterhouseCoopers and JPT Partners to prepare for bankruptcy.。It could be saber-rattling, it could be responsible preparation for every eventuality, or a sign that management has given up

September 2, 2021 - Any forecast for Amigo shares will depend on the September deadline for the company's accounts to be signed by designated auditor KPMG。Gone are the days when the Big Four accounting firms are becoming increasingly aware of the challenges to their credibility posed by recent scandals and accepting high pay checks in exchange for passing their audit reports.

Amigo Holdings Stock Price (Five Years Later)

Amigo Holdings' 2020 year-end statement of accounts, released on March 31, 2020, is reminiscent of the past and why the company received such strong support from investors。The company has taken a relatively innovative approach, using new technology to make borrowing easier.。Given the pressure of COVID-19 on low-wage and zero-hour workers, the company's service market exists and will even expand

If the company can withstand short-term challenges, the slogan of "simplicity, humanity and honesty" still makes sense, and with the new board, the company hopes to benefit from the lessons learned

Emphasizing the "simple" and "honest" approach and rethinking the "people" factor can make Amigo work。If it fails, competitors or new entrants are likely to join in。Unfortunately, the demand for short-term microloans looks set to become part of the economic system for some time

The current 8p share price is not a surprise given the legal threat to its survival, but it also reflects that Amigo has suspended new loans from March 2020.。Even so, the company still has about 22.20,000 customers, of which less than 10% of the loan is paid by the guarantor

Of these Amigo customers, about 40,000 used their loans for home improvements and 2,000 for new businesses.。If these trends continue in a post-epidemic world and Amigo is able to lend to new customers, it is well positioned to benefit from the shift to a home-based work and sideline economy。While there are plenty of "ifs" to consider, there are reasons to be bullish on any Amigo stock forecast through 2025.

Is Amigo worth buying?

The case has turned into a high-stakes game。Regulators and judges have so far shrugged off Amigo's SoA program, which offers small awards to more claimants rather than more to a few.

Amigo said providing a higher level of compensation would increase the company's debt to the point that it would put the company in management trouble.。The court opposed Amigo's "take it or leave it" approach, causing its share price to plunge in the first half of the year, but any Plan B would also put the company at risk of bankruptcy.

Amigo has been reaching out to bondholders and other stakeholders since the May incident.。The independent client committee, set up at the court's request, met on August 8 and was tasked with considering all alternatives.。At some point, Amigo is already on the move

Still, some believe that the original SoA is the best option, or more accurately, the least bad option, at least for shareholders.。So this standoff may not be between Amigo and its customers, but between Amigo, its shareholders and the courts.。At that point, it will be up to a judge to decide whether they want to bankrupt the company.