Markets have been gripped by a mood of uncertainty over the past week. After a good November trading has been overshadowed by a plummeting oil price, a falling rouble and trouble in Chinese markets. Volatility is increasing and participation is starting to drop off as we head towards the holidays. Considering this backdrop Lending Club shares performed very well in the first day of trading. It saw 45 million shares traded and closed the session 56% up. This has been great publicity for the nascent peer-to-peer industry, Lending Club is at the fore of the sector and the performance yesterday shows that there is great investor confidence in the space. We will watch with interest to see if this performance continues over the next 6 months.
On Wednesday Lending Club stock was priced at $15 a share, this is above the range of $12 to $14 a share that was announced this week. The shares then launched at $24.75. This is a lot higher than many were expecting, and it is over double the initial price range that Lending Club gave of $10 to $12 a share. This gave Lending Club a valuation of just under $9 billion.
Initially trading was frenetic with 15 million shares changing hands. Trading volumes then steadied with 45 million changing hands over the course of the first day. The shares opened at a 65% premium over the $15 per share price announced on Wednesday and closed at $23.43.
This positive launch has created a good precedent for OnDeck that is expected to go to market next week. It is targeting the $16 to $18 per share range.
Lending Club shares are trading at almost 50 times what underwriting bank analysts project for its earnings in 2017. This is a multiple that is more comparable to tech stocks and Internet companies rather than financial institutions. Renaud Laplanche said this is "a reflection of who we are and how we operate. We run an online marketplace, and you see the same network effects you see on Amazon, Zillow, LinkedIn, Facebook, Alibaba. The service we deliver is a financial product, but we essentially operate as an online marketplace."
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