Looks like a good short although the low float and high short interest make it somewhat risky...my short thesis on this stock is based on the fundamental outlook that their earning growth will collapse in the next few years. I see it trading below $100 in a year(currently $372).
P/E 400. Borrowing fee 0.8% ,,Its mortgage products comprise purchase and refinance products" In other words, loading their boat with previously dysfunctioning loans ?.
"low Float", I am referring to the shares available for trading/ versus outstanding... In an environment of extremely low rates, such companies will not be able to sustain their model of borrowing short lending long(as the yield curve was inverted a few months ago). It's my personal view that the quality of loans will deteriorate and default rates will tick up. From their recent 10-Q filing "Revenue in our lending business is subject to cyclical and seasonal trends. Home sales (and purchase mortgages) typically rise during the spring and summer months and decline during the fall and winter months, while refinancing and home equity activity is principally driven by mortgage interest rates as well as real estate values. However, in certain historical periods additional factors affecting the mortgage and real estate markets, such as the 2008-2009 financial crisis and ensuing recession, have impacted customary seasonal trends. We anticipate revenue in our newer products to be cyclical as well; however, we have limited historical data to predict the nature and magnitude of this cyclicality. Based on industry data, we anticipate as our personal loan product matures we will"
these are QM loans w/ DTIs < 43% on the hi side. Not your subprime 2.0. Even on non-QM loans the burden is on the lender to show Ability to repay. Even these loans have shown very little defaults since 2013.
Was all of this true in the past when TREE was > $400? If so, then I would strongly urge you not take a short. You may be right this time anyway, but since nothing has changed, there is no reason specifically to go short.