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Author Topic: Lending Club stock slide  (Read 13557 times)

havastat

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Lending Club stock slide
« on: January 17, 2016, 08:53:20 pm »

Lending Club stock closed Friday at $7.73, getting close to half its offering price and about a third of its high closing price, part of a continual slide in the stock price which has been going for several months down. Although the market is now in a general downturn, LC has been sliding significantly faster than the S&P 500 has been accelerating. Last week it fell nearly 10% in one day.

Thoughts.
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ducks

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Re: Lending Club stock slide
« Reply #1 on: January 17, 2016, 09:16:49 pm »

I think they face an uphill battle. Many lenders allow you to apply online now, there isnt really a differentiation.

Who do you go to when you want a loan? Would many people immediately think of Prosper or Lending Club? I dont think so. Banks still have branches everywhere, there are local banks and credit unions with which people tend to feel an affinity. There are payday lenders and title lenders that advertise heavily, whereas Ive never seen a Lending Club ad.

Huge competition, little name recognition, no differentiation.
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Urbi_et_Orbi

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Re: Lending Club stock slide
« Reply #2 on: January 31, 2016, 11:27:12 pm »

I think they face an uphill battle. Many lenders allow you to apply online now, there isnt really a differentiation.

Who do you go to when you want a loan? Would many people immediately think of Prosper or Lending Club? I dont think so. Banks still have branches everywhere, there are local banks and credit unions with which people tend to feel an affinity. There are payday lenders and title lenders that advertise heavily, whereas Ive never seen a Lending Club ad.

Huge competition, little name recognition, no differentiation.

Yeah, I have only seen or heard a handful of LC ads, whereas I am inundated with Prosper ads pretty much every day.

Come to think of it, the only LC marketing activity I have come across in recent memory was that sailboat named Lending Club 2:

http://www.sailingscuttlebutt.com/2015/07/15/lending-club-2-cuts-bait/

Fred93

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Re: Lending Club stock slide
« Reply #3 on: February 01, 2016, 08:34:10 pm »

I think they face an uphill battle. Many lenders allow you to apply online now, there isnt really a differentiation.

Who do you go to when you want a loan? Would many people immediately think of Prosper or Lending Club? I dont think so. Banks still have branches everywhere,

Nice theory.  However the facts are that LCs loan volume is DOUBLING EVERY YEAR.

Furthermore, lenders observe that the loan volume dries up in the last week of every quarter, and then pops like an opened floodgate at the beginning of the next quarter.  This indicates that they intentionally slow down at the end of each quarter to control their numbers.  In other words, they have enough borrowers to grow faster, but they regulate themselves to "only" doubling every year.

These facts are inconsistent with the story youre trying to paint.

ducks

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Re: Lending Club stock slide
« Reply #4 on: February 01, 2016, 09:49:42 pm »

Doubling every year from a very low base. For how many years do you think they can continue?

Heres some food for thought: http://sentienttechnologies.com/lending-clubs-party-stock-will-collapse-another-software-entrepreneur-know/
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Fred93

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Re: Lending Club stock slide
« Reply #5 on: February 02, 2016, 02:08:29 am »

Doubling every year from a very low base. For how many years do you think they can continue?

Dunno.  We all get to watch and see.  So far theyre doing very well.

You know, you say "from a very low base" as if this means they are somehow insignificant.  This is nuts.  They are far larger than any other P2P company.  Also, you can minimize year after year doubling if you want, but I dont know any banks who have ever doubled in a year.  Most companies have never doubled their sales in a year.  This puts them in a pretty rare class.

To be clear, Im not a buyer of LCs stock.  It was way overpriced at the IPO.  However, I am a believer in the company.  Theyre doing everything right so far.


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Heres some food for thought: http://sentienttechnologies.com/lending-clubs-party-stock-will-collapse-another-software-entrepreneur-know/

Thats not food.  Thats leftovers.  No facts.  Just speculation.  I didnt see a date on it.  Sounds like it was written around the time of the IPO.   There were a lot of such articlles written, each not worth the paper (or lack of paper) it was written on.
« Last Edit: February 02, 2016, 02:10:53 am by Fred93 »
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ducks

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Re: Lending Club stock slide
« Reply #6 on: February 02, 2016, 08:02:55 am »

Is it significant at all that theyre still reporting losses despite apparently spending almost nothing on marketing?

Are they cutting marketing expenses because it is such a struggle to break even, because they can rely on their momentum for growth, because they are growing through "private label" lending, and/or is it part of this self-regulating to only double volume each year?
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Fred93

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Re: Lending Club stock slide
« Reply #7 on: February 03, 2016, 03:51:07 am »

Is it significant at all that theyre still reporting losses despite apparently spending almost nothing on marketing?

They are spending big on marketing.  One must to achieve such growth in a consumer business.

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Are they cutting marketing expenses because it is such a struggle to break even,

I believe your presumptions are wrong.  I dont see a "struggle" at all.  My belief is that they are managing the company to achieve zero earnings.   They are spending all the cash flow on growth, which includes borrower acquisition, as well as increased infrastructure and staff.

I know that stock analysts write lots of words about each  quarterly earnings report, and the meaning of whether it was a small negative number or a small positive number.  All these words are meaningless.  The small positive or negative earnings each quarter are the residual after management has attempted to drive the earnings to zero.

The number to watch is loan volume.

ducks

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Re: Lending Club stock slide
« Reply #8 on: February 04, 2016, 01:05:34 am »

Youre right, the most recent financial reporting shows they doubled spending on sales and marketing over the previous year. I was reading that they had reduced spending, but this was only proportionally per loan and compared to their total expenses. I was also basing my comments on the subjective experiences of Urbi and myself. Marketing is still a large and exponentially growing portion of their budget.

None of this explains a share price decline from about $24 to about $7 over the past year, though, which was the original question.

Maybe well know more on Feb 11 with release of the 2015 financial results.
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Fred93

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Re: Lending Club stock slide
« Reply #9 on: February 04, 2016, 11:43:57 pm »

None of this explains a share price decline from about $24 to about $7 over the past year, though, which was the original question.

Good, because it is not meant to.  The stock price is down because the massive overexcitement surrounding the IPO has reduced to more ordinary excitement, which supports a much lower stock price.  Entirely a sentiment issue.

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Maybe well know more on Feb 11 with release of the 2015 financial results.

Not a chance.  The earnings will again be approximately zero.  Perhaps a few cents positive and perhaps a few cents negative.  The actual value will carry no information at all.  Lots of articles will be written either way.  Ignore them.

Meanwhile, the company is successfully growing at an amazing rate, successfully building infrastructure, brand, etc, dominating the industry. 

However I cant predict when the stock will go up.  Probably after it has gone down a bunch more over the next year or so.

havastat

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Re: Lending Club stock slide
« Reply #10 on: May 09, 2016, 10:27:01 pm »

Closed at $4.62, their lowest ever, after falling by more than 1/3 in one day over the LaPlanche affair and resignation.
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havastat

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Re: Lending Club stock slide
« Reply #11 on: May 09, 2016, 10:27:31 pm »

Lobby
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ducks

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Re: Lending Club stock slide
« Reply #12 on: May 09, 2016, 10:37:23 pm »

Its possible we will look back at Lending Club as a failed experiment. The best outcome for shareholders may be a takeover by a larger lender with a strong compliance department.
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havastat

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Re: Lending Club stock slide
« Reply #13 on: May 11, 2016, 07:06:38 pm »

Its possible the market may have overreacted to a few relatively minor irregularities.

Well have to see if whats been made public so far is all LaPlanche did. Perhaps he merely presided over these deals on his watch. They are far from the biggest and neednt have been handled by him personally. If thats all there is, I suspect the public will recover and move on, and LCs stock price will too.

On the other hand, if this turns out to be only the tip of an iceberg and there are bigger problems lurking below it, the situation will be more serious.
« Last Edit: May 11, 2016, 07:08:14 pm by havastat »
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alexpkeaton

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Re: Lending Club stock slide
« Reply #14 on: May 12, 2016, 01:15:11 pm »

Its possible the market may have overreacted to a few relatively minor irregularities.

I made a small bet that its an overreaction and bought 500 shares @ $3.84.
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