Shares of World Acceptance (WRLD) Plunge as Citron Says 'The End is Near'
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Shares of World Acceptance Corp. (Nasdaq: WRLD) are getting crushed today following an extremely bearish note from known-short-selling research firm, CitronResearch. The stock actually opened today's trading session higher than yesterday's close, but as savvy traders got word of the report, the stock began gradually selling-off. When Citron posted the article at about 12:40pm ET, downside intensified and shares of World Acceptance are now down more than 20% to $20.58.
The Citron report, which is the first in what will be a series of three reports, argues that World Acceptance's entire business is based on something known as "loan flipping". This practice of loan flipping has lead to numerous lawsuits alleging that the company uses predatory lending practices -- with several lawsuits which have yet to be disclosed by World Acceptance, according to Citron.
Citron points out that such lending practices have come under heavy scrutiny recently as "the financial pressures of unemployment, foreclosure, repossessions and bankruptcies take their toll on the country’s most economically disadvantaged..." The research firm believes that sustainability in the loan installment business is limited, and, especially for World Acceptance, with its "exceedingly dubious financials", the end is near.
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