From Seeking Alpha
LendingClub (NYSE:LC) is certainly in the littered field of disastrous public debuts. Shares are down 80% since late-December 2014 and more than 50% this year alone. The company originally priced its IPO at $15 per share, but opened its first day of trading at $24.75.
Shares currently trade below $5.
Although the company has struggled, the bottom really fell out in May when its CEO resigned alongside three other senior managers after several “dodgy loan sales” had surfaced. A Justice Department subpoena and several probes followed as a result.
On Tuesday, the company reported an earnings per share loss that missed analysts’ expectations, while also announcing its CFO would be resigning. After initially falling Tuesday, the stock has actually rebounded quite a bit, closing flat in the session at $4.79.
This could be investors deciding that all of the negatively is already priced in. It could also be short covering, given that the stock is down immensely from basically any point pre-May 9th. As of the most recent reading, about 20% of the stock was sold short.
Investors are now getting into an interesting situation. With shares this low, a lot of the risk is clearly baked in, with shorts likely tempted not to press their luck too much. With that being said, the company has seen its top leaders go and sales growth plummet. Revenue growth of just 6.5% pales in comparison to the 97% growth it put up in the same quarter last year, and even the 86.6% growth is registered just last quarter.
Company Profile from Wikipedia
Lending Club is a US peer-to-peer lending company, headquartered in San Francisco, California. It was the first peer-to-peer lender to register its offerings as securities with the Securities and Exchange Commission (SEC), and to offer loan trading on a secondary market. Lending Club operates an online lending platform that enables borrowers to obtain a loan, and investors to purchase notes backed by payments made on loans. Lending Club is the world’s largest peer-to-peer lending platform.The company claims that $15.98 billion in loans had been originated through its platform up to 31 December 2015.
Lending Club enables borrowers to create unsecured personal loans between $1,000 and $35,000. The standard loan period is three years. Investors can search and browse the loan listings on Lending Club website and select loans that they want to invest in based on the information supplied about the borrower, amount of loan, loan grade, and loan purpose. Investors make money from interest. Lending Club makes money by charging borrowers an origination fee and investors a service fee.
The company raised $1 billion in what became the largest technology IPO of 2014 in the United States. Though viewed as a pioneer in the fintech industry and one of the largest such firms, Lending Club experienced problems in early 2016, with difficulties in attracting investors, a scandal over some of the firm’s loans and concerns by the board over CEO Renaud Laplanche’s disclosures leading to a large drop in its share price and Laplanche’s resignation.
