Down around 31% - thoughts?
Only that I noticed Metro was the most shorted company on this list a few weeks ago and had been high on the list for a while.
I wonder if long term it will lose out to digital start ups which have more innovative offerings
I think long term is going to be a challenge as things move more digital, but I’ve heard some good things about them and feel they may be better placed than some of the other high street banks, at least in the short term. As digital banks continue to improve, there will most likely be a push towards more differentiated / premium offerings such as FirstDirect / Metro - rather than Halifax / Santander.
I wonder if there will be a place for a physical branch in some capacity (e.g. safety deposit boxes) or if they will die out completely and be replaced by complementary services (e.g. post office branches, online services)? I guess a large component will be how long we maintain physical currencies.
Having said all of that, I think the stock was overpriced due to the growth story and more susceptible to problems such as this.
That coupled with the heavy short position is probably what’s caused such a big spike, I reckon today’s news isn’t actually a fair reflection of the effect this will have on future earnings.
They’re over-exposed to riskier loans that they thought, but the loans aren’t underperforming. They will need to increase their capital to cover theses loans as they’re viewed as higher risk, which will detract from some future profit. They also missed analyst expectations, but they were priced for ambitious growth so that’s to be expected!
They may still struggle to justify their price, but I think this particular move isn’t quite justified.
It may well drop further though!!