The 3 Debates Around Investing In LendingClub

LendingClub Corp LC reported third quarter results after Tuesday's market close. Revenue of $154 million fell slightly short of the $156.7 million Wall Street expected and EBITDA of $21.0 million was in-line with expectations. Investors found fault with the company's guidance, which calls for a net loss of $67 million on revenue of $579 million.

The Analyst

KeyBanc Capital Markets' Josh Beck.

The Rating

Beck maintains a Sector Weight rating on LendingClub's stock with no assigned price target, but a fair value range of $4 to $5 per share. (See Beck's track record here.)

The Thesis

LendingClub's earnings report presents three key debates which investors and analysts will be discussing moving forward, Beck said: funding, unit economics, legal and regulatory. The analyst said he's "cautious" on the existing demand for LendingClub's users at a time when bank loan visibility has improved, but other institutional funding viability "remains low."

Second, credit policy and pricing changes could reduce conversion and pressure cost-per-funded-loan — or CPFL — efficiency in the midterm, the analyst said. Third, the Office of the Comptroller of the Currency may come in at any point and propose some sort of regulations or laws on fintech companies, Beck said.

Price Action

Shares of LendingClub were trading lower by more than 17 percent early Tuesday morning at $4.50, below the stock's prior 52-week low of $4.92.

Related Links:

Should You Join The Lending Club Bulls Ahead Of Q3 Earnings?

Amazon Has Been Quietly Positioning Itself To Become A Money Lender