Collapse of America’s Taxi Cab Industry: Short MFIN!

America’s Taxi Cab industry is beginning to show signs of a complete economic collapse – and it could be the catalyst that drives the entire U.S. economy into its most severe recession in history. Medallion Financial Corp (MFIN), one of America’s largest taxi medallion lenders to the U.S. Taxi Cab Industry, has just filed its second quarter 2016 results – and it shows that taxi cab drivers in the U.S. have reached an economic breaking point!

Two years ago, MFIN in its 2Q 2014 10-Q filing disclosed total past due medallion loans of only $1.51 million vs. $316.47 million in medallion loans that were current on payments. At the end of 2Q 2016,  their total past due medallion loans were $78.48 million, up a stunning 5,097% over the last 24 months. Their medallion loans current on payments have declined by 29% to $224.75 million.

medallionloanspastdue30plusdaysvscurrentonpaymentsCurrently, a shocking 25.88% of MFIN’s medallion loans have been past due for 30+ days vs. 0.47% past due for 30+ days 24 months ago. Even more stunning, 13.53% of MFIN’s medallion loans have been past due for 90+ days vs. 0% past due for 90+ days 24 months ago.

medallionloanspercentagepastdueby30plusdaysvs90plusdaysThe Federal Reserve’s artificially low interest rates and trillions of dollars in quantitative easing blew up a bubble in the taxi cab medallion market that has now burst. The average individual NYC taxi cab medallion sales price peaked in June 2013 at a high of $1.051 million, before crashing 55.3% to only $470,000 in April 2016. It has since rebounded slightly to $571,714 in June 2016.

averagenyctaximedallionThe biggest collapse in taxi cab medallion prices has occurred in Chicago. In 2013, the average Chicago medallion sold for $345,774. So far in 2016, the average Chicago medallion has sold for only $59,795 for a shocking decline of 82.7%! Compared to the average 2015 sale price of $243,083, Chicago medallion prices are down this year by 75.4%!averagechicagomedallionMFIN has only marked down the value of their Chicago medallion loans by 1.67% to $38.747 million. Another major medallion lender Signature Bank (SBNY) marked down their Chicago medallion loans last quarter by 30%.

Separate from their Chicago medallion loans, MFIN is the owner of 159 Chicago taxicab medallions. Despite MFIN’s Chicago medallions losing $29.15 million in value this year, MFIN has only marked down their value by $4.755 million, using the excuse, “The medallion sale transactions reported by the City of Chicago during the last six months have been unrepresentative of a liquid market, and have not been considered for valuation purposes.” According to MFIN, their 159 Chicago medallions are still worth $208,346 each or nearly 2 1/2 times their current market price!

NIA suggests short selling MFIN here at $5.09. It will likely crash to below $3 per share by year-end!

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