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Why LendingTree Inc. Stock Plunged Today

By Jordan Wathen - Jan 13, 2016 at 3:15PM

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Shares of the online loan marketplace are taking a beating after the company raised its full-year 2015 guidance.

What: Shares of LendingTree (TREE -6.13%) are simply getting crushed, trading down nearly 28% at 2:55 p.m. ET.

So what: LendingTree's puzzling sell-off comes after it raised guidance for the fourth quarter and full year of 2015.

The table below summarizes the guidance changes, with implied year-over-year growth rates for each metric.

Metric

Implied Q4 Guidance

Full-Year Guidance

Implied Growth (YOY)

Revenue

$76.6 million to $77.6 million

$252.5 million to $253.5 million

51%

Variable marketing margin

$25.5 million to $26.5 million

$92.5 million to $93.5 million

42% to 43%

Adjusted EBITDA

$10 million to $11 million

$38.8 million to $39.8 million

78% to 82%

Source: 8-K filing.

Notably, LendingTree was slated to deliver a presentation at the Needham Growth Conference today. Without having been in attendance, one can only speculate about what might have slipped during conversations with investors and analysts. It's important to note that the company's shares traded higher in after-market trading on Tuesday, when it released its guidance update.

Now what: LendingTree is somewhat of a leveraged bet on the greater online lending business. Shares of related companies OnDeck (ONDK) and LendingClub (LC -2.87%) were down 16.3% and 6.1% at 2:55 p.m. ET, respectively.

On a previous conference call, CEO Doug Lebda noted that personal loan lenders have "7 to 10 times more money to lend than they can actually lend" and that lenders were "literally begging to get on our network."Demand for borrowers is a boon for a company like LendingTree, whose revenue is tied to lenders' marketing expense.

As for what's driving today's sell-off, it's not immediately clear. But what is clear is that guidance update the market loved last night isn't providing much help to the stock price today. 

Jordan Wathen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Stocks Mentioned

LendingTree, Inc. Stock Quote
LendingTree, Inc.
TREE
$43.01 (-6.13%) $-2.81
LendingClub Corporation Stock Quote
LendingClub Corporation
LC
$15.25 (-2.87%) $0.45
On Deck Capital, Inc. Stock Quote
On Deck Capital, Inc.
ONDK

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