MoneyLion’s Quick Comms May Have Lifted Stock
We have a recent story suggesting that swift litigation communications just might help a stock price bounce back. Anecdotal? Sure. But interesting nonetheless.
On Sept. 29, the U.S. Consumer Financial Protection Bureau sued New York City-based MoneyLion, a fintech firm that, according to Investopedia, targets Americans with less than $2,000 in savings. The CFPB accuses MoneyLion of “imposing illegal and excessive charges on service members and their dependents,” specifically exceeding a 36 percent rate cap mandated by the Military Lending Act, according to the bureau’s press release.
The CFPB has other allegations, such as that the company makes customers join a membership program to get low-rate loans and then won’t let them nix the memberships until the loan is paid.
“MoneyLion targeted military families by illegally extracting fees and making it difficult to cancel monthly subscriptions,” CFPB Director Rohit Chopra said in the release.
Obviously, this poses a reputational threat. People tend not to like companies that take advantage of military families. The market noticed. MoneyLion’s share price dropped a whopping 30 percent the day the suit was filed in New York federal court (the S&P 500 slipped 2 percent that day).
At 7:23 p.m. ET, the company put out a press release on Business Wire defending itself (headline: “MoneyLion Responds to CFPB’s Meritless Complaint”).
MoneyLion has the highest regard for its military and veteran customers.
The company said it had been cooperating with the agency concerning the accusations for three years. “Despite our cooperation, the bureau has chosen the sensationalist route of prioritizing headlines instead of engaging in constructive dialogue,” it wrote.
It wisely tipped its hat to military families. “MoneyLion has the highest regard for its military and veteran customers and are [sic] committed to working with this important community to help them achieve better financial health,” it wrote.
The company said twice in the release that the lawsuit concerns only one of its many product offerings. That was clearly aimed at investors — it was spooked by the stock plunge.
And lo and behold, the next day the share price lifted 11 percent — and 7 percent and 12 percent the next two days, although it’s still down nearly 75 percent year-to-date.
At least one commentator made a connection between the clapback and the stock rise. “Last night, MoneyLion went on the offensive,” Bram Berkowitz wrote in The Motley Fool on Sept. 30. “Either there is some kind of trading manipulation that I am just not seeing right now, or the market thinks investors overreacted yesterday.”
Or maybe a few words went a long way.
Photo Credit: MoneyLion
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