Invesco Stock Plummets 5% Amid Yield Curve Inversion: Can The Company Stay Afloat During A Recession?

Following the treasury bond yield curve inversion on July 5, Invesco Mortgage Capital Inc IVR stock took a massive hit.

What Happened: At 10:45 a.m. Wednesday (July 6), Invesco’s stock price dropped to $15.12 which is a decrease of over 5%, according to Benzinga Pro.

Today’s hit to the stock price comes after the yield curve inverted yesterday. 

The yield of treasury bonds has a direct correlation to the rate at which a banker will make interest after lending money to a client. If the curve is inverted, then it becomes harder for a banker to make money.

Also Read: US Treasury Yield Curve Inverts Again As Dow Jones Index Plummets 130 Points

Invesco Mortgage seeks to derive money from real estate loans and if it remains difficult for bankers to make money on a mortgage, then the company will continue to suffer.

In the fourth quarter of 2021, Invesco’s net income remained in the negative with a reported net income of -$64.647 million. It then reported a net income of –$228.422 million to start 2022.

These figures represent a 453.38% decrease in the company’s net income.

Why It Matters: If Invesco continues to lose money at this rate, the company could possibly face bankruptcy.

It becomes more evident every day that the U.S. economy is heading, if not already in, a recession, and if Invesco doesn’t figure out how to make money again, the company could shut down.

During times of economic hardships, people are more hesitant to take out a mortgage as one is less likely to purchase a home during a recession. Seeing that Invesco is solely based on mortgages, the company must figure out a way to pivot its business practices to survive the upcoming economic slump.

Photo: Courtesy of Kostiantyn Li on Unsplash