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Here’s why the Plenti (ASX:PLT) share price zoomed 13% higher today

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The Plenti Group Limited (ASX: PLT) share price has been a very disappointing performer since landing on the ASX boards at $1.66 this week.

But thankfully for shareholders of the technology-led consumer lending and investment company, it is on course to finish its first week as a listed company in style.

On Friday the Plenti share price was up as much as 13% to $1.38. It has faded a touch in afternoon trade but is still up a solid 7% to $1.31 at the time of writing.

What is Plenti?

Plenti is a technology-led consumer lending and investment business which provides borrowers with efficient, simple, and competitive loans.

It also provides investors with the opportunity to earn attractive returns by lending money via its peer-to-peer platform.

Plenti has been operating since 2014 and has funded approximately $870 million in loans to over 55,000 borrowers. These loans are predominantly to creditworthy borrowers in the automotive, renewable energy, and personal lending verticals.

One company which appears to have faith in the Plenti business model is auto listings giant Carsales.Com Ltd (ASX: CAR).

It owns 16,085,286 shares in the company, which is the equivalent of a 9.53% stake.

Why is the Plenti share price zooming higher today?

Today’s gain appears to be due largely to news that the government is easing responsible lending rules.

This is expected to reduce the barriers in switching credit providers, which could be a positive for lenders like Plenti.

In addition to this, I suspect bargain hunters could be swooping in today after its disappointing decline this week

Prior today, for example, the Plenti share price was trading at $1.22. This was a massive 26.5% lower than its IPO price and appears to have caught the eye of some investors.

Should you buy the dip?

I think there are a lot of unknowns with Plenti at this stage and so I wouldn’t be in a rush to buy shares.

Instead, I would suggest investors keep their powder dry and wait to see how its loan book performs over the next 12 months or so.

In the meantime, as boring as they may be, I think investors would be better off sticking with Westpac Banking Corp (ASX: WBC) and the rest of the big four. Especially after the government’s decision to relax responsible lending rules.

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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia has recommended carsales.com Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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