The Wisr (ASX:WZR) share price is in a trading halt today. Here’s why

After its recent share price surge, the financial lender is planning a capital raise. Let’s take a look

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A man on a phone call points his finger, indicating a halt in trading on the ASX share market

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The bullish Wisr Ltd (ASX: WZR) share price, which has surged ~30% in the last two weeks, is frozen at 32 cents apiece today after the company announced a trading halt.

Wisr operates in the lending industry, facilitating a unique financial wellness ecosystem underpinned by competitive consumer finance products. The company’s Wisr app automatically rounds up transactions to the nearest dollar, using the spare change to pay off debt faster.

Why the trading halt?

Wisr requested a trading halt in relation to a capital raising. The only detail the company provided in today’s announcement was that the capital raising will comprise an institutional placement and a share purchase plan. Its shares will remain in a trading halt until Wednesday, 2 June or after the completion of the placement.

What investors might want to note is that Wisr already retains a strong cash position, with $33 million in cash and cash equivalents as at 31 March 2021.

Why has the Wisr share price surged in recent weeks?

It has taken a while for the Wisr share price to get going. Its shares have been consolidating around the low 20 cent level since June last year and only managed to push above the mid 20 cent level in the last few weeks.

Despite its share price chopping back and forth, the company has been busy kicking goals, delivering a number of financial and operational milestones.

The company’s March quarter results witnessed an accelerated level of new loan originations, revenue growth and loan book quality metrics. Wisr’s operating revenue surged to a record $7.5 million for the quarter, a 275% increase in the third quarter of FY20 and 27% increase in the second quarter FY21.

This growth was underpinned by a strong interest in its financial wellness platform, with more than 56,000 new customer profiles created in the March quarter, compared to 47,900 in 2Q21. This brings the company’s total profiles to 401,488 as at 31 March, and the company is confident in its path to 1 million customers at a proven low acquisition cost.

More recently, the company hit another milestone with the pricing of its $225 million asset-backed securities (ABS).

Its inaugural ABS transaction received a top tranche AAA rating from international ratings agency, Moody’s, demonstrating the company’s low credit risk and ability to repay short-term debt.

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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