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[yankeefan]

It's possible the market may have overreacted to a few relatively minor irregularities.

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

Did you see the news that the company and the CEO had invested $14mm in one of the funds buying their loans?

[alexpkeaton]

Did you see the news that the company and the CEO had invested $14mm in one of the funds buying their loans?

Yes. Perhaps I'm naive, but I'm not sure what the problem is. If it's a conflict of interest it's been rectified by shitcanning the CEO. I don't see how it should affect LC as a going concern. Hence my bet.

[yankeefan]

Did you see the news that the company and the CEO had invested $14mm in one of the funds buying their loans?

Yes. Perhaps I'm naive, but I'm not sure what the problem is. If it's a conflict of interest it's been rectified by shitcanning the CEO. I don't see how it should affect LC as a going concern. Hence my bet.

I think the worry is that they were, or might have been, artificially boosting the demand for their loans by buying them themselves.  If not for the company purchases, would the loan growth have been so attractive?

[Fred93]

I think the worry is that they were, or might have been, artificially boosting the demand for their loans by buying them themselves.  If not for the company purchases, would the loan growth have been so attractive?

I've heard several people suggest that now, but look at the numbers.  LC did $2.75 Billion in loan originations last quarter, and this $15M investment doesn't go very far toward goosing the product volume! 

Also, holding loans isn't a crime.  Many lending companies do it.  There have even been people calling for lending companies to be FORCED to hold some fraction of their own loans, to have "skin in the game".

[havastat]

I am wondering if this one of those situations where one has inexperienced lawyer types who see a problem and go bezonkers without any evaluation of alternatives and consequences for the business. Assuming that what happened was illegal and couldn't have been rectified by giving the investors involved their money back, I suspect they have already cost the company far more than the value of any fines that might have occurred. The board could have rectified the situation by creating policies both on conflict of interest and on the types of companies LC could invest in with its own funds. They could have addressed the situation without creating a panic.

My suggestion is that either come forward with more details so investors can understand what the iceberg beneath the tip is, or, if this is all there is, they say so very clearly and stop the panic. We need to get to the bottom of this. And if this is really all there is, the Board might want to consider bringing LaPlanche back if he apologizes, maybe gives something out of his salary to help cover investor losses, and promises not to do it again.

[mothandrust]

I believe your presumptions are wrong.  I don't 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.

Growth of what?  If I'm going to own the stock, I want to see earnings growth, and if they are "managing the company to achieve zero earnings" that doesn't fill me with confidence.  Since when are "zero earnings" an achievement?  Look, mom, I got a D- in all my classes!

No earnings, debt/equity is over 400% and the stock price is under $5.  Clearly they are NOT "doing everything right" and this is when the economy is growing?  What happens when we hit a recession?

[havastat]

I think LaPlanche was managing the company as another Amazon, forgo growth for years in exchange for rapidly expanding the business. The idea is to claim a large fraction of the market share that's theoretically out there and become a major player before some huge corporation gets the idea and beats you to it.

I think that is probably Lending Club's only hope. The whole sector, and it, are tiny players in the credit world. If its new management intends to milk it for cash and accept a tiny growth rate, it's probably over. Companies with deeper pockets can simply do the same thing it's doing. Without the cachet of being an up-and-coming Internet startup off to do great things, if it's stopped mid-jump and forced to lose all of its momentum, it may not have enough height to get anywhere.

[havastat]

The New York Times put out an article on Lending Club today.

http://mobile.nytimes.com/2016/05/15/business/lending-club-a-story-stock-that-skimped-on-the-details.html

The article said that "Compared with some of he corporate shenanigans we've seen lately, these disclosure failings look relatively minor." It's main thesis was that Lending Club has not disclosed a lot of details about its actual business or risks. In the absence of details, uncertainty leads quickly to doubt and then fear.

[Fred93]

I believe your presumptions are wrong.  I don't 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.

Growth of what?  If I'm going to own the stock, I want to see earnings growth, and if they are "managing the company to achieve zero earnings" that doesn't fill me with confidence.

Well, to be fair, I wasn't making an argument for buying the stock.

Amazon does something very similar.  Invests heavily in growing the business and ends up with near zero earnings, and the market loves Amazon.  It is curious.  Depends heavily on what the market believes about the growth.

No earnings, debt/equity is over 400% and the stock price is under $5.  Clearly they are NOT "doing everything right"

That's not quite fair.  LC has NO DEBT, except for the notes, which are balanced by the loans on the other side fo the balance sheet.  This is not a debt-laden company.   Net debt to equity is zero.

and this is when the economy is growing?  What happens when we hit a recession?

Like now you mean?  This is a fair question. 

[yankeefan]

Did you see the news that the company and the CEO had invested $14mm in one of the funds buying their loans?

Yes. Perhaps I'm naive, but I'm not sure what the problem is. If it's a conflict of interest it's been rectified by shitcanning the CEO. I don't see how it should affect LC as a going concern. Hence my bet.

I think the worry is that they were, or might have been, artificially boosting the demand for their loans by buying them themselves.  If not for the company purchases, would the loan growth have been so attractive?

From WSJ

New LendingClub Mistake Shows Loan-Demand Issues Persist

The online lender has downwardly revised a recent spike in weekly loan sales to investors
 

 revealing instead that the company was buying some of the loans itself. 
By
Telis Demos

Updated June 10, 2016 9:30 a.m. ET
 
 6 COMMENTS   
 
LendingClub Corp. has revised downward a recent spike in weekly loan sales to investors, revealing instead that the company was buying some of the loans itself.

The weekly measure has been in focus of late, as analysts and investors try to gauge how deeply LendingClub’s loan volumes have been affected by the forced resignation last month of its chief executive, Renaud Laplanche.

Previously, the company had reported a large upward spike in loans sold via public notes to investors at the end of May, which was noted in some analyst reports as a sign of potential recovery of investor demand. LendingClub, the largest publicly traded online lender, said in May that many investors had stopped buying loans after Mr. Laplanche’s resignation.

[bamalucky]

http://finance.yahoo.com/news/lending-club-names-ceo-plans-cut-179-roles-104624287--sector.html

[alexpkeaton]

The company, which had 1,382 employees at the end of 2015

Holy crap! I had no idea they'd grown their headcount that much.

[alexpkeaton]

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

I sold it at $4.50.