zcommodore

Since I found the site, I've generally been very bullish on Prosper.  The last few months, I always tried to find a silver lining to negative information.  I always kept hoping that the next change or the next month would show better improvement.  As you can see with the following graph, I've been disappointed the last several months.

The above graph shows the total dollars in loans originated by Prosper each month based on information I've collected from their performance page.  As you can see, Prosper has basically been flat since January of this year.  The peak in March-May happened right around the time of a huge spike in publicity that coincided with Prosper's one-year anniversary in February.

I keep hoping to see an increase in total loans originated but I keep getting disappointed.  In October, at a Prosper Meet & Greet in Hawaii, the CEO, Chris Larsen indicated Prosper needed to grow the total amount in funded loans ~4-5X if Prosper was to achieve profitability.  I don't know exactly what their plan is for that but I don't see it happening.

For the time being, I've decided to put my lending on hiatus until I see improvement in this area.  I know that doesn't really help Prosper grow but at the same time, I'm not sure about Prosper's long-term survival if they can't start growing soon.  Ultimately, my 1-3 $50 loans per month probably won't make much difference to Prosper's bottom line so I doubt they'll lose a lot of sleep over it.

Frankly, given the reaction I've read on prospers.org to some of the changes Prosper has made, particularly the removal of their old forums and full moderation of their new ones, I suspect I'm not the only lender who has stopped lending.  I get the feeling that Prosper thinks it can keep on getting new lenders to replace the disgruntled ones but I'm not seeing it in total loans funded.  Even if they are attracting "new blood" it's not enough for them to grow and they need growth to eventually become profitable.

Luckily for Prosper, so far, the competition has not been very attractive from what I've seen.  Zopa.com came out last week but only offering CD's at 5.1% didn't go over too well with the lenders that I saw.  LendingClub.com's interface just doesn't appeal to me and I've read of a number of lenders pulling out of that as well, despite Lendingclub's referral program.  Prosper is well-positioned to keep their lead in this market if they can just find a way to grow to profitability.  Short of that, I don't see much future in P2P lending.

Right now, the only positive I see that could really help Prosper would be a secondary market.  I understand Prosper is going through the regulatory hoops necessary for that to happen.  If Prosper can add some liquidity to it's market that could certainly help it's bottom line.  They could attract lenders who don't want to be "stuck" for 3 years and they could skim off fees for each sale of a loan.  Both of those things could significantly help.

In the mean time, until I see improvement, I'm on hold.