What: Welcome to the public markets, Lending Club (LC 2.40%)! Shares of the peer-to-peer lending marketplace fell as much as 18% on Wednesday after the company announced its first set of quarterly results as a public company.
So what: The fourth-quarter performance and the company's outlook for the current quarter were a bit of mixed bag relative to Wall Street's expectations (notably, the full-year outlook was light on anticipated profit):
|
Fiscal first-quarter results |
Consensus estimate (pre-announcement) |
---|---|---|
Revenue |
$69.6 million |
$66.3 million |
Adjusted EPS |
$0.01 |
$0.01 |
|
Guidance |
|
Q1 Revenue |
$74 million-$76 million |
$70 million |
Q1 Adjusted EBITDA* |
$6 million-$9 million |
$7.6 million |
2015 Revenue |
$370 million-$380 million |
$369 million |
2015 Adjusted EBITDA* |
$33 million-$42 million |
$44.2 million |
Lending Club CEO Renaud Laplanche told Barron's today that "we've been very clear that we are planning to continue to invest aggressively in future growth in product and technology; we are not looking to expand margins at this time." Perhaps, but the stock market's reaction to the company's outlook suggests management was not clear enough for Wall Street.
Now what: The lending market is ripe for disruption, and Lending Club seems committed to shaking things up. Furthermore, the company appears to be taking a long-term view to building the franchise. Nevertheless, the stock isn't cheap by any standard metrics and represents a bet on highly uncertain outcomes. If you enjoy hunting for the next big thing, Lending Club might be the stock for you; for this value investor, it looks suspiciously like speculation.