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Why LendingTree Stock Gained 35% in January

By Demitri Kalogeropoulos – Updated Apr 21, 2019 at 12:10AM

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Investors grew a bit more optimistic about the online lending broker's prospects last month.

What happened

Shares of consumer lending specialist LendingTree (TREE -2.72%) spiked 35% last month, trouncing the S&P 500's 8% gain, according to data provided by S&P Global Market Intelligence.

The rally put shares a step closer to positive territory, but they remain 10% below where they stood a year ago, while the broader market is 1% higher.

A client signs papers at a bank.

Image source: Getty Images.

So what

An undeniable factor in LendingTree's January stock spike was a general shift in investors' attitudes. The major market indexes posted their best starts to a year in decades, after all, and the force of that trend ensured rallies for many of the stocks that had been hit hard by the fourth-quarter's market decline. LendingTree entered the month having lost 35% in 2018, which established low expectations that might easily turn higher with improving investor attitudes. Those opinions started to shift in the last days of December, and the momentum carried through into January for LendingTree shareholders.

Check out the latest LendingTreeearnings call transcript.

Now what

The company will likely publish its fourth-quarter results in early March, and that report that should show that its growth continues to pinched by its shrinking mortgage segment. The good news is that this trend is having a progressively weaker impact on revenue as sales of non-mortgage products surge higher. CEO Doug Lebda and his team issued an initial 2019 outlook in early December that forecast a sales rise of between 29% and 34%, but this prediction could shift in its next report to reflect the latest lending conditions .

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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