Please ensure Javascript is enabled for purposes of website accessibility

Why LendingClub Stock Leapt 12.4% Today

By Joe Tenebruso – May 8, 2019 at 8:15PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Analysts believe the peer-to-peer lending company's shares have significant upside potential.

What happened

Shares of LendingClub (LC -5.17%) popped more than 12% higher on Wednesday, following the release of the company's first-quarter results and a corresponding analyst upgrade.

So what

The online-loan marketplace's revenue rose 15% year over year to $174.4 million. Wall Street had been expecting revenue of only $169.4 million. 

The gains were fueled by an 18% rise in loan originations, to $2.7 billion. That helped drive LendingClub's transaction fees 22% higher, to $135.4 million.

Demand for new loans was particularly robust during the quarter, with loan applications surging 31%.

A person pointing to the word upgrade

Image source: Getty Images.

These strong results prompted Wedbush Securities to upgrade LendingClub's shares to "outperform" from "neutral." The investment firm also boosted its price target for the stock to $5 from $3.75. 

Wedbush believes LendingClub's improving operating efficiency will help it produce an adjusted EBITDA margin of 20% by the end of 2019. The firm also expects LendingClub to grow revenue by 12%-15% annually in the coming years.

Now what

Despite its impressive growth, LendingClub is not yet profitable. But the company is making significant progress in this regard. "The actions we are taking to simplify our cost structure underpin our goal to be adjusted net income profitable over the second half of 2019 with full-year benefits realized in 2020," CFO Tom Casey said in a press release.  

Should LendingClub achieve its profit goals, it's possible that its stock could reach -- or even exceed -- Wedbush's $5 target.

Joe Tenebruso 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

LendingClub Corporation Stock Quote
LendingClub Corporation
$11.01 (-5.17%) $0.60

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.