The latest Covid lockdowns could spell disaster for this stock.
Prospa lends heavily into the 'bricks & mortar' hospitality & retail space - the very SMEs who are currently being severely affected by these lockdowns around the country.
But this time there is no Jobkeeper or other stimulus to save the day for these SMEs.
All of the outgoings of these little SMEs will still need to be paid - rent, power, staff entitlements, insurances, mortgage payments of the owners etc. And guess who will be the last to get paid - the powerless unsecured lenders like Prospa who sit there in the background patiently waiting to collect their weekly direct debit payments - except this time many of these payments won't come in. And it's highly unlikely that a stressed out business owner who is fighting to keep his mouth above water is going to give a stuff about paying back a high-interest charging unsecured lender like Prospa.
And the longer / more frequent these lockdowns, the more of these SME will collapse into insolvency - leaving unsecured creditors like Prospa out to dry.
PGL Price at posting:
82.0¢ Sentiment: Sell Disclosure: Not Held
