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Why Shares of OppFi Are Rising Today

By Bram Berkowitz – Jan 11, 2022 at 8:53AM

Key Points

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The stock has been rising ever since the company announced a repurchase program last week.

What happened

Shares of fintech company OppFi (OPFI 8.62%) traded more than 15% higher as of 1:31 p.m. ET today for no obvious reason, but they have been surging ever since management announced a stock repurchase plan.

So what

OppFi, which is a digital lender mainly to subprime borrowers, said last week that its board of directors has authorized a share repurchase program that could see the company buy back as much as $20 million of its stock between now and December 2023.

Red squiggly line with arrow moving upward.

Image source: Getty Images.

"While our primary focus is to deploy capital to drive incremental growth and investment into the OppFi platform for product enhancements, new technology, and a superior consumer experience, this repurchase program is designed to provide the Company with an effective means to also support our stockholders when our share price becomes disconnected from what our Board believes to be our long-term value and future earnings potential," Todd Schwartz, executive chairman and co-founder of OppFi, said in a statement. 

Since that announcement, OppFi stock is up more than 34%. With a public float of just shy of 12.5 million shares, average volume of about 409,000 shares traded daily, and a $20 million share repurchase, that sets the stock up nicely for some upward movement.

Now what

The Federal Reserve's recent shift to raising interest rates more quickly is not good for fintech lenders like OppFi because it makes funding more expensive and defaults more likely.

But the company has been profitable for many years now, and I like the platform it is building that seeks to help subprime borrowers build credit and then move them into lower-interest loan products.

Bram Berkowitz owns 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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