The digital bank and fintech stock SoFi Technologies (SOFI +1.84%) has been a popular choice, especially among retail investors. Over the past year, the stock has served investors well, delivering gains of over 37%. However, SoFi continues to trade at a fairly rich valuation. Although it's come down some from previous highs, the stock recently traded at close to 34 times forward earnings and nearly 10 times forward sales.
While SoFi may continue to perform well, it isn't the only fintech stock available. Why not buy a similar business that's growing earnings fast and trading at a fraction of the valuation?
Image source: Getty Images.
Another personal lender that has executed well
LendingClub (LC 0.39%) is another company that specializes in personal lending, particularly for credit card debt consolidation. LendingClub has also been developing its purchase finance lending business, which includes loans for elective dental or medical treatments. The company is also in the process of moving into the home improvement space to make larger loans with its platform.
Similar to SoFi, and actually before it, LendingClub purchased a bank in 2021 and transformed into a much more profitable entity. After fine-tuning several parts of its platform, such as its deposit platform and tech stack, to better support its model and dealing with several years of high volatility in the broader market, the company has really started to see its earnings ramp higher.
In 2024, LendingClub generated $0.45 of diluted earnings per share (EPS). In 2025, the company grew earnings by 154% to $1.15 per share. This year, management has already guided for EPS of $1.65 to $1.80, implying nearly 50% growth at the midpoint.
NYSE: LC
Key Data Points
Starting this year, LendingClub also made a major accounting change to simplify its business model for the broader market. Previously, the company would hold a portion of loans on its balance sheet, intending to hold them until maturity and account for them in a manner similar to a traditional bank. This involved taking an up-front provision for expected future loan losses, which would significantly cut into earnings each quarter.
The rest of LendingClub's originations would be either sold immediately upon origination, packaged into structured certificates, or seasoned on its balance sheet with the intent to eventually sell those loans, typically after six to 12 months of generating interest income. The seasoned loans are marked to market each quarter at their fair value.
The use of multiple accounting methods for loans seemed to confuse the market or make the company more difficult to analyze for institutional investors. Starting this year, LendingClub will account for all of its loans using the fair value option. This will simplify the company's model and make earnings easier to understand by better aligning the timing of revenue recognition with the timing of losses.
Up next: Boosting returns and closing the valuation gap
With a clearer accounting plan and the platform well positioned to scale, LendingClub's management team has its sights set on elevating returns, largely by ramping up originations. In 2025, the company had an annual run rate of $10 billion in loan originations. Management has already guided for $12.1 billion in originations at the midpoint of their guidance this year, with an upper bound of $12.6 billion.
At an investor day last year, management said their medium-term goal is to ramp originations to $18 billion to $22 billion and achieve returns on tangible common equity (ROTCE), a key return metric that bank and financials investors focus on, in the 18% to 20% range. Currently, the company is generating a ROTCE of about 12% to 13%.
Now, LendingClub and SoFi are not exactly the same. SoFi's platform also offers consumers many other types of loans and financial services and products. The company also has a bank technology division that focuses on core processing technology and payment processing. The market has clearly assigned the stock a higher valuation based on these other businesses, although personal lending remains the main driver of SoFi's revenue and earnings.
That said, LendingClub trades much cheaper than SoFi at less than 10 times forward earnings and 1.8 times forward revenue. Furthermore, Wall Street analysts on average currently expect the company to generate $2.40 in EPS in 2027, which implies another 40% growth, according to data provided by Visible Alpha.
Of course, the personal lending sector does not come without risk. A recession could lead to deteriorating consumer credit, which may send loan buyers to the sidelines. If interest rates increase, loan buyers face a higher cost of capital. In this scenario, loan buyers require higher returns on loan investments, which could force personal lenders to pull back on originations. Finally, a blow-up in private credit, a major buyer of loans from LendingClub and SoFi, could also be problematic.
With LendingClub stock trading around $15.20 per share, it has strong upside potential. For instance, assuming the same earnings multiple, if the market becomes more confident that LendingClub can generate $2.40 in EPS in 2027, that implies a $24 share price. The longer-term opportunity is whether LendingClub can successfully and consistently generate a 20% ROTCE. That would grow the company's tangible book value, or net worth, and result in a much higher multiple and, therefore, a much higher stock price.
