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Why Shares of LendingClub Are Up Today

By Bram Berkowitz – Oct 7, 2021 at 11:33AM

Key Points

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While there is no specific news, LendingClub may be bouncing back with the general market, or investors may be gearing up for Q3 earnings.

What happened

Shares of the digital marketplace bank LendingClub (LC -0.84%) traded as much as 10.9% higher this morning for no obvious reason, although I think investors may be starting to get excited about third-quarter earnings.

So what

I didn't see any super-specific news for the company, but the stock has struggled a bit over the last month, like a lot of the market, so perhaps the strong market conditions helped the company bounce back.

LendingClub also announced its third-quarter earnings release date for the end of October, and those earnings could be a very important catalyst for the stock. In the second quarter, after getting its new model in place, LendingClub completely blew out all earnings expectations, including its own, generating a profit ahead of schedule and originating $2.7 billion worth of volume in the quarter. The company also significantly raised its 2021 guidance. The news sent the stock soaring more than 40% in after-hours trading that day.

But even after the massive growth, many investors (including me) believe LendingClub is still undervalued compared to peers in the space. Another strong quarter of earnings will further show consistency and support LendingClub's new model, which combines a high-flying fintech company with a traditional bank charter.

Blue line with arrow trending upward.

Image source: Getty Images.

Now what

It has been a long ride for LendingClub from the troubles the company got into in 2016 to the acquisition of Radius Bank last year to make its transformation possible. Now I believe the company is ready to go on the offensive, and I remain very bullish on this stock.

Bram Berkowitz owns shares of LendingClub and has the following options: long January 2023 $45 calls on LendingClub. 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

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

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