What: Shares of LendingTree (TREE 3.17%) 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 +0.00%) and LendingClub (LC 3.20%) 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.
