Peer-to-peer lending giant Funding Circle’s share price has fallen substantially since its stock market debut in 2018, but participation in a government scheme appears to be giving it some support.
The P2P business lender began trading on the London Stock Exchange in October 2018 at 440p per share, but its value quickly tumbled and has been volatile since then. Shares hit a record low of 25.2p on 18 March, down 94 per cent from its initial public offering price, before rising back to 52p a couple of days later.
Funding Circle has been hampered by a more uncertain economic environment that saw it halve its revenue growth forecasts for 2019 and it has also faced criticism for delays in withdrawals on its secondary market.
There has been some positive news as its UK platform hit profitability last year and it seems to have been given a big vote of confidence after it was accepted on to the coronavirus business interruption loan scheme (CBILS).
Its share price was 55p on 14 April, amid growing calls for P2P lenders to get involved in the scheme, before shooting up to 115p last Friday (17 April) as it was revealed that Funding Circle was the first accredited P2P lender.
The price has since dropped down to 93p but there is precedent that the value could rise again once the platform actually starts providing government-backed loans.
Read more: Funding Circle approved for US loans package
Similar share price movements can been seen among banks, who are also accredited CBILS lenders.
Bank stocks, along with many other equities, crashed in March as the coronavirus outbreak panicked global markets.
But FTSE 100 lenders such as Barclays, HSBC, Lloyds, RBS and Metro Bank, which have all been part of CBILS since its launch in early April, have seen their prices start to climb.
Their share prices aren’t rocketing and are still well below where they were trading earlier this year, but they have all received a stock market boost since the scheme started.
For example, Barclays was at 82.86p at the start of April and is now trading at 90.6p, up 9.3 per cent.
Lloyds is up 7.6 per cent from the start of April at 30.43p.
Metro Bank is up 8.3 per cent this month to 91p.
RBS is an outlier though, with its price growth more or less flat at 106p.
There are of course plenty of other reasons share prices can rise and fall but this suggests that if Funding Circle utilises CBILS effectively and can keep investors and shareholders on side, it could boost its value as it heads towards two years on the market – or at least stop more drastic declines.