Funding Circle’s share price plunges after Citi downgrade

FUNDING Circle’s share price plummeted on Thursday after Citigroup analysts cut their recommendation to ‘sell’ and halved their price target on the stock.

The recently-floated peer-to-peer lender saw its shares fall by 25 per cent in the morning and were trading 24 per cent lower at 245.05p by 12.45 GMT.

Citigroup research noted “evidence of credit deterioration”, highlighting the recent update from Funding Circle’s dedicated investment trust.

On Tuesday, Funding Circle SME Income Fund reported its largest-ever decline in monthly net asset value returns, partly due to an underperforming cohort of UK loans linked to a rise in personal insolvencies.

Read more: Funding Circle’s chief risk officer confident in global outlook

In an emailed response following the fund’s update, Funding Circle chief executive Samir Desai said the platform was happy with its returns.

“We are pleased with loan performance across all four of our markets, with loans taken out since 2016 projected to deliver returns of between four and seven per cent per year,” he said.

“We recently announced two lending transactions in the UK and the US worth £1bn and $1bn respectively, which is a vote of confidence in the quality and risk-adjusted returns of loans on the Funding Circle platform.

“We are projecting loans taken out today to deliver returns of between five and eight per cent globally.”

Funding Circle launched on the London Stock Exchange on 3 October after closing its £300m initial public offering the previous week and entering conditional dealing at 440p per share.

Shares fell as low as 334p on the first day of trading but rose to 385p later in the afternoon.