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LAFDI market report - Crowd Crash

The LAFDI took a pounding this week and sharply under-performed global equity markets.  Whilst it is notable that many financials have been weak, with specialty financials a notable under-performer, it was also clear that the worst performance of all has been reserved for the darlings of the disruptive space.

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Weekly return



MSCI World


Top 5 performing Stocks in last week


TUNG LN Equity



PAYS LN Equity



GLIF LN Equity



QIWI US Equity



MNY AU Equity


Worst 5 performing Stocks in last week


TREE US Equity



ONDK US Equity



LC US Equity



MONI LN Equity



PFSI US Equity


* Returns are calculated for the week to local market close on Thursday.

Online loan broking exchange Lending Tree lead the declines and in so doing presented something of a mystery.  On Tuesday afternoon the company announced that its fourth-quarter and full-year results would exceed previous guidance.  As one would expect the shares then traded positively in the after-market.  However on Wednesday the stock plunged almost 30%.  The online loan-marketplace provider had predicted that its revenue for the full 2015 year would be within a tight range around $253 million, up from a previous range of $244 million to $247 million. CEO Doug Lebda said that "both our mortgage and non-mortgage business continued to perform exceptionally well in the fourth quarter," despite what he called "a seasonally challenging period and despite market fears over rising interest rates."  Whilst all of that seemed positive there are two possible explanations for the plunge that followed.  First there was some talk that the market had been expecting a larger increase in guidance and with a greater emphasis on profits rather than revenue.  Second the company was scheduled to talk at a conference on the Wednesday – albeit as yet there is no explanation of what might have been revealed that was so badly received.  The shares did recover a portion of the losses on Friday after bullish commentary from the CEO and the announcement of an expanded share buyback program. 

There was limited stock specific news in either Lending Club or On Deck Capital and the overwhelming likelihood is that both are suffering from similar concerns.  Whilst there was some small and not very relevant looking insider selling to report at Lending Club it seems much more likely that both companies are suffering from concerns previously noted in these reports: looming regulatory risk; increasing competition; and the un-proven nature of their business models in both a rate tightening cycle and a credit cycle.  New news on any of these topics remains notably absent but the current bout of market volatility has served to intensify fears of the unknown. 

Please note – The LAFDI is now available on Bloomberg.  Tickers:

LAFDITR <index> GO for the Total Return Index

LAFDIPR <index> GO for the Price Return Index

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