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Update on Lending Club, after Q2 Earning Report

August 16, 2016

 

Lending Club has recently released its earning report for Q2 2016. The result is worse than expected. The company lost -$0.09 per share for the quarter, revenue is at 102.4 mil.

 

Highlights:

Top Line: Revenue / Loan Origination Decrease

1. Origination reach $1,955 mil vs last quarter of $2,750 mil

2. The decrease resulted from reduced investment of banks and other institutions

 

Bottom line: Earnings, Expense

1. Total expense reduced from previous quarter of $83.1 mi to 68.3 mil

2. Expense increased to $64.2 mil from $42.9 mil from Q1 2016 to Q2 2016

 

Also, the company CFO announced departure. The stock reacted with initial disappointment, and right away stablize its footing and moved upward. For the last two weeks or so, the stock continue to move up with good volumes, now the $6.5 resistance level we identified back in May 10th 2016 is within reach. 

 

I had visited Lending Club at their corporate headquarter in mid July. I believe that Lending Club is managing a turnaround from the current situation.

 

During my visit, I learned couple of internal changes in the area of: internal control, operation, credit model, business model, reducing staffing, hiring a Chief Capital Office to build confidence with institutional investors. As a result, 15 out of the 20 institutional investors had returned to Lending Club and buying loans.

 

I believe Lending Club as well as the P2P industry is in the midst of change, and these changes are for the better. The reduced staffing is expected to reflect in their earning somewhat in the 2nd quarter of 2017. The cash reserve of about $800+ mil in the book of Lending Club is also another factor I believe Lending Club has the financial resources to go forward with the turnaround.

 

We will continue to follow on the future development of Lending Club stock price, and will update you in the near future.

 

Stay tuned!

 

Daniel Wu, CEO

Pair Lending, LLC

Elevate Your Wealth

 

Disclosure: I personally own the stock, some of my clients also own the stock. Pair Lending has business relationship with Lending Club.

 

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