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Why Shares of OppFi Are Volatile Today

By Bram Berkowitz – Nov 12, 2021 at 2:37PM

Key Points

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The company reported earnings results for the third quarter of the year.

What happened

Shares of the digital lender OppFi (OPFI -0.41%) jumped nearly 13% Friday morning following the release of its third-quarter earnings report Thursday night. However, the stock had given away most of those gains by the afternoon, with shares trading roughly 1% higher as of 1:25 p.m. EST.

So what

OppFi reported earnings per share (EPS) of $1.06 on total revenue of $92 million. Adjusted EPS was $0.21. The results beat analyst estimates.

Magnifying glass over chart line that goes up and then down.

Image source: Getty Images.

The company, which is seeking to disrupt the subprime lending space, originated $164.5 million in loan volume in Q3, while increasing automated loan approvals from 51% in Q2 to 58% in Q3.Net charge-offs, which is debt unlikely to be collected and a good indicator of losses, jumped from 28% in Q2 to 36% in Q3.

OppFi also maintained its full-year guidance of adjusted net income of $62 million to $66 million on total revenue of $350 million to $360 million.

Now what

It was a solid quarter for OppFi, which to me continues to look like a profitable and undervalued fintech company. The company is not getting the credit I think it deserves, likely because it operates in the subprime lending space.

But I like management's vision and the innovative financial products they are rolling out. Ultimately, I see this as a stock that can go much higher in the long term.

Bram Berkowitz owns shares of OppFi Inc. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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