AltFi.com uses cookies on this website. They help us to know a little bit about how you use our website, which improves the browsing experience and marketing - both for you and for others. They are stored locally on your device. By continuing to use this site you accept this use of cookies. Go to the Privacy and Cookies page for more information. You'll see this message only once.
Not signed in. Log in here.

Your daily download of all things alternative finance and fintech, from us at AltFi


 

Fresh Lending Club fears prompt share price plunge




By Daniel Lanyon on 18th October 2016

https://goo.gl/U3dZOp

The giant of the marketplace and p2p industry has spooked the market following a series of announcements.  

 

Beleaguered US marketplace lending platform Lending Club saw one if its largest daily falls in its share price following on from a monthly trending downwards of nearly 25 per cent.

 

In Monday trading Lending Club’s share price fell 7.25 per cent before markets closed, as shown in the graph below.

 

 

Source: Google

 

Lending Club has had a tough year with investors losing confidence sharply amid allegations of impropriety surrounding its underwriting of loans being prepped for sale to an institutional investor in May. The quick result was the resignation of its co-founder and chief executive officer Renaud Laplanche and subsequently a major shakeup of its senior executive team.

 

This all seemed to have calmed investors in the firm, with a steady summer climb until mid-September. Since then, however, its share price has been hit hard with a 22.4 per cent fall including yesterday’s plunge.

 

 

The fresh concerns of investors centre on a consensus that a raising rate environment due to the Federal Reserve realising its goal for a December hike will prompt Lending Club to raise its rates for its loans in tandem.

 

In a letter to investors, chief investment officer Siddhartha Jajodia wrote that rate of interest was rising to to continue “providing solid risk adjusted returns to investors”.

 

He also warned investors in the same letter that Lending Club had been observing higher delinquencies in populations “characterised by high indebtedness, an increased propensity to accumulate debt, and lower credit scores”.

 

Lending Club’s interest rates will be increased by a weighted average of 26bps, with changes concentrated in grades F and G, and marginal movements in other grades. The platform already hiked rates by a weighted average of approximately 135bps from November 2015 to June 2016.

 

The firm will report its latest earnings 27 October for the third quarter ending September 2016.

 

 

Comments


Enter your name:

Enter a comment in the box below:

More like this:

Robeco launches fintech fund for retail investors
20th November 2017
Daniel Lanyon
Digital bank Monzo sizes up IPO
15th November 2017
Emily Nicolle
LendInvest launches buy-to-let loans
16th November 2017
Ryan Weeks