There is a harsh take-down of World Acceptance Corporation (NASDAQ:WRLD) at today.   Here is the link:

I am a big advocate for access to credit, but I have never been a fan of WRLD or WRLD stock.  It is a sleazy business, and the company admits that three-quarters of its revenue comes from keeping people on a debt treadmill.   I’m usually arguing against this treadmill claim, but it is completely accurate when it comes to World Acceptance Corporation.

The CFPB is investigating the company, and as the article points out, there is a strong likelihood that its debt treadmill model will be killed.  Either that, or its practice of tricking borrowers into adding on useless insurance products and auto club memberships will be prohibited.  Both are cornerstones of revenue.  Without either of them, World Acceptance Corporation loses a lot of money.

WRLD stock has been buttressed by stock buybacks, which the company borrows money to carry out.

I do like the notion of shorting WRLD stock here.  I think the author at SeekingAlpha is correct, and WRLD stock will go lower, if not all the way to zero.


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