World Acceptance (WRLD) Shares May Come Back to Earth

Shares of World Acceptance (Nasdaq: WRLD) are down 4% mid-day on heavier-than-normal volume after a negative Wall Street Journal story about the company.

The Journal article, written by John Jannarone, said World Acceptance 'golden goose' business of refinancing existing customers is showing cracks. Even though charge-offs have stayed fairly consistent at about 15%, borrowers aren't paying down principal. Without aggressive loan expansion from its existing customers, the charge-off rate could ramp significantly.

The story also said while the company has chosen to operate from locations that allow it to charge annual interest rates ranging from 25% to 215%, any comprehensive lending overhaul could stop the music.

Jannarone's article concludes, "While the business has been out of this world, investors shouldn't count on the stock continuing to defy gravity."

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