Advance America stock tumbles after store closures
After the Arizona ban on payday lending went into effect, and new legislation is being passed in Colorado, Advance America announced it was closing more than 100 store locations nationwide. One of the nation’s largest payday lenders, and one of the few that grew large enough to be publicly traded, is shutting down 122 stores in Arizona, Washington and Colorado. The stock price for Advance America then quickly tumbled on the New York Stock Exchange or NYSE, dipped 5 percent. Advance America has been in a stock lull so far this year
Advance America to shutter 122 stores
Advance America announced it would close 122 stores. The affected states are Washington, Arizona and Colorado. The state of Arizona recently let a law lapse that allowed payday lenders to operate in the state. The law was not renewed, and payday lending is now illegal in Arizona which has forced numerous payday loan stores to close their doors. Advance America will be closing 47 stores in Arizona and 75 other locations in Colorado and Washington state. The company will incur up to $5 million in closing costs in doing so.
Stock price dips
Advance America announced the store closures on July 9, after an all time low for the year. The share price for the firm was down to $3.55 on the NYSE. As of July 22, the stock price had climbed back up to $3.66. Publicly traded payday lending companies are thought to be at great risk with the creation of the Bureau of Consumer Financial Protection, as some believe the newly created agency will regulate cash advance lenders out of business. Since the average payday loan store employs at least 3 people, 366 people are now going to be out of work due to these closures.
State governments starting to slip the noose
Payday lending has been under fire for more than a decade. While no one relishes the idea of high cost lending, payday lenders entered into a market that the banks had left. One wonders what options will be left if the finance market that is not Wall Street is driven out of existence.