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Why LendingClub Blasted Almost 50% Higher Today

By Eric Volkman – Jul 29, 2021 at 6:21PM

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It's amazing what owning a traditional bank can do to a financial service company's results.

What happened

On Thursday LendingClub (LC -0.84%) stock entered the stratosphere with an almost 48% gain. The fuse that lit the rocket was the company's publication of a fresh set of quarterly results.

So what

LendingClub, which has been pivoting from its peer-to-peer borrowing roots into a more traditional financing provider, absolutely thrashed analyst estimates in its second quarter.

Helped greatly by the closing of its acquisition of Radius Bank earlier this year, both interest and non-interest income rose precipitously. They blended into an over fivefold gain in net revenue on a year-over-year basis to $204.4 million. That was supported by robust growth in loan originations, which came in more than eight times higher at $2.72 billion.

A customer interacting with a bank teller.

Image source: Getty Images.

Now that it has a "proper" banking operation, the company holds a solid base of customer deposits. These totaled $2.5 billion at the end of the quarter.

On the bottom line, LendingClub flipped into the black with a net profit of nearly $9.4 million ($0.09 per share), against the over $47 million net loss of Q2 2020.

On average, analysts modeling the stock were anticipating just under $134.6 million on the top line, and a per-share net loss of $0.43.

Now what

Owning a traditional lender "is the beginning of a dramatically enhanced earnings trajectory for the business," CEO Scott Sanborn was quoted as saying. LendingClub proffered encouraging full-year 2021 guidance, with anticipated loan originations growing by $2.9 billion to $3.0 billion, total revenue rising by $240 million to $250 million, and net income landing at $139 million to $154 million.

Eric Volkman 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.

Stocks Mentioned

LendingClub Stock Quote
$9.48 (-0.84%) $0.08

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