I’ve been looking at the carnage left behind in Goeasy (TSX: GSY) and holy moly:
… announced today that it expects to incur an incremental charge off in Q4 2025 of approximately $178M against gross consumer loans receivable of $5.5B as at December 31, 2025, and a related write down of approximately $55M for loan interest and fees.
… $178+$55 is roughly the net interest income the company makes in a quarter. Oops!
The Company also expects a net increase in allowance for credit losses on gross consumer loans receivable in the quarter of approximately $86M compared to the amount reported as at September 30, 2025.
… this is quite a material increase given the typical top line of about $328M for Q3-2025. A +$86 allowance raise is a 26% increase in expected defaults – ouch!
The historical reporting practice resulted in certain customer payments being recorded as received while they were in fact in the process of being settled at month end, some of which were ultimately not collected, and also impacted the Company’s reported delinquencies.
… talk about counting your chickens before the eggs hatch!
Not surprisingly, the company’s stock took a huge bath today – down 56%.
Looking at the corporation in general, their reported Q3-2025 has (rounding to the nearest $100M) about $500M cash, $5.2B in loans receivable and on the liabilities side, capitalized with $4.7B in debt.
It’s pretty evident they are clearing out the books with this purge – the question remains whether this company actually ended up making any money or not on their core business. Doing a very rough projection with the above numbers suggests after fixed expenses, they did not. The company managed to get to $210/share in the middle of 2025 clearly with false profitability.
Are they a value at $50? I’ve always shied away from these types of financing companies since you never know when this sort of event will occur as it is difficult to ascertain the credit quality within the loan portfolio. On one hand, you have the Element Fleet Managements of the planet, and then on the other hand you have the Crown Capital and Accord Financials of the planet that are in much more questionable shape. I am not good at picking winners in this space.
This also might be a reflection of what’s going on in the downward-sloping part of the so-called “K-shape economy”.