H&R Block got slammed again today.
One of the most actively traded stocks on the NYSE today, nearly 24 million shares changed hands closing near the lows of the session. Shares were pummelled after reportsthat the company had filed a lawsuit against HSBC for breach of contract related to refund anticipation loans.
Apparently the IRS killed the business this past summer when the agency announced it would eliminate the "debt indicator" which basically, gave HSBC & H&R Block a sense of a client's credit worthiness before mailing them a check in anticipation of a tax refund — for a price of course. HSBC now indicating: no IRS indicator, no loans which… would be a problem for H&R Block's anticipated revenue stream.
Problems were not isolated to the stock — bonds and CDS spreads were under pressure too. Andy Brenner Head of Emerging Markets at Guggenheim Securities says bonds were slammed on heavy volume. One example — 5 1/8 2014 bonds trading 128 basis points wider on the day.
The stock has been under pressure recently for issues related to potential mortgage put-back exposure.