What happened

Actions of the specialized financial lender Horizon Technology Finance (NASDAQ: HRZN) traded more than 10% lower late in the morning today after the company reported disappointing fourth quarter and full year 2020 earnings.

So what

Horizon Technology Finance, which provides secured loans to venture-backed companies in the tech and biotechnology fields, reported net investment income of $ 0.21 per share in the fourth quarter of 2020.

That’s down more than 50% from the fourth quarter of 2019 and missed the analysts consensus estimate of $ 0.28 per share. Total revenue for the quarter was around $ 10.1 million, which is also below analyst expectations.

Image source: Getty Images.

Venture-funded businesses can be risky. In 2020, Horizon Technology terminated several underperforming loans that resulted in realized losses and saw the company’s annual profits fall by more than 22% from 2019.

Now what

Despite a difficult year for the company, it operates in a large space. The tech, life sciences and healthcare industries are ripe for disruption and teeming with startups looking for capital.

Additionally, entrepreneurship and start-ups tend to increase after a recession, which I would expect to see again, given how the pandemic has accelerated the use and need for technology.

Horizon Technology also holds a large basket of to guarantee and stakes in companies that will turn into big gains if those companies are acquired or go public.

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Bram berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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