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Latitude share price launches 19% in first major gain since scrapped Humm deal

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The Latitude Group Holdings Ltd (ASX: LFS) share price is gaining meaningfully for the first time since the company’s deal to acquire the buy now, pay later (BNPL) leg of Humm Group Ltd (ASX: HUM) was scrapped last week. And it’s returned to the green in style.

At the time of writing, the Latitude share price is trading at $1.28, 18.52% higher than it was at Thursday’s close.

For context, the broader market is also gaining today. The S&P/ASX 200 Index (ASX: XJO) is currently up 0.41% while the All Ordinaries Index (ASX: XAO) has lifted 0.7%.

Let’s take a closer look at what’s been going on with the financial services provider and its stock lately.

The Latitude share price is recovering some of its recent falls on Friday – a full week after the company’s planned acquisition of Humm’s consumer finance business fell through.

Latitude previously offered to buy the business – housing Humm’s BNPL offering – for $35 million in cash and 150 million Latitude shares.

When the offer was first tabled in February, it was worth $335 million. However, its value tumbled alongside the Latitude share price before being binned.

The companies said the proposal was terminated due to “major disruption in financial markets”.

Latitude also told the market that less than 1% of its revenue and receivables come from its own BNPL offerings. It continued:

Latitude Group is experiencing good organic volume growth, is profitable and well capitalised to execute on a number of opportunities ahead.

The company’s positive outlook came after Humm chair Christine Christian said the Humm consumer finance leg hadn’t turned a profit in 2022 before the deal was scrapped.

Christian cited “intense competition, rising interest rates, and weakening consumer sentiment” as the root causes of the segment’s struggles.

The fallout of the deal’s abandonment appears to have caused plenty of drama in Humm’s camp. All but one member of the company’s board vowed to walk this week. Meanwhile, all has been quiet with Latitude.

The Latitude share price traded flat on the day the deal was cancelled. It later tumbled nearly 23% between the end of last week and Thursday’s close.

Today’s rebound sees it now only around 8.5% lower than it was at the end of last Friday’s session.

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