by Structured Settlement Watchdog®
"It's my money and I need it now" may have finally exploded. Cash now is "crap now" as people seem more likely to make the figurative jump out of windows instead of shouting out of them.
JG Wentworth stock continues to plummet in the days since its earnings release, closing November 12, 2015 at $2.91 per share. As I write this post, JG Wentworth stock has dropped another 11.68% in the first 3 1/2 hours of trading. One analyst revised its price target to $4.50. Only 3 months ago analysts were saying $12.
Timeline of JG Wentworth Share Crash
January 6, 2015 $10.66/share
August 4, 2015 $8.71/share
August 25, 2015 $4.80/share
November 13, 2015 $2.57/share
A hypothetical $1,000,000 investment would have purchased, give or take 93,808 shares on January 6, 2015
On November 13, 2015 at $2.57/share the investment in JG Wentworth would have been worth $241,086.56, good for a $758,913.44 loss of capital.
In its recent Q3 2015 earnings conference call, JG Wentworth reported the following about its structured settlement purchasing business in an industry subset that it has dominated since the beginning:
"Structured Settlements (in this case purchasing of structured settlement payment rights) is a mature market. It remains an attractive business in which we have a leading position, but the business is changing and it is very competitive. The prolonged low rate interest environment has attracted significant capital, which has increased the number of market participants, contributing to pricing pressure. The marketing shift to the web and online has also contributed to increased competition by essentially lowering that barrier to entry by affording a lower cost of customer acquisition for new and existing competitors. Consequently, as we continue to assess and manage through the segment's changing nature, we are refining our strategy and continue to take out costs as we focus on overall profitability. (emphasis is mine)
We're taking a hard look at our multi-brand strategy to determine how best to position our brands in the marketplace. We see J.G. Wentworth as the umbrella brand for all of our products, and the industry leader brand for Structured Settlements. We expect this strategy to yield further optimization of our marketing spend. Additionally, we are evaluating opportunities across the Company to lower our cost structure through operational efficiencies and productivity improvements that are consistent with our focus on profitability.
Our (JG Wentworth) Structured Settlements business is seeing a direct impact related to the increasing nature of the competitive environment. The resulting impact is significant, and impacts our TRB and transaction mix, which drives down spread revenue and spread margin. Although we have had success in raising our buy rate on new deals initiated in the quarter, our margins remain under pressure as we balance the variables of buy rate, deal size, length of deal, and timing of our deal pipeline, along with the timing of securitizations. As we look to combat the competitive pressures, we are reviewing, top to bottom, our marketing and operational discipline to position us for profitable growth"
There's much more to what JG Wentworth says than meets the eye in my opinion
The marketing shift that JG Wentworth speaks of includes the rampant reckless false advertising and fraudulent advertising, including companies that use fake credentials and fake paid for testimonials that deceive consumers who are approached by settlement purchasers each and every day.