Lending Club
- Thread starter xandman
- Start date
I think people are concerned about the acquisition cost as well as ROI for lenders on their platform. Don't get me wrong, P2P lending market is going to be much larger than what it is now in long term.
Btw, even Facebook dropped almost 50% before it went up 400%...
Btw, even Facebook dropped almost 50% before it went up 400%...
How do you expect them to grow their business beyond of what they are already doing?
Growth wise they will grow because it is a great concept as they have grown in the last few years. You have to compare it with banks. Banks do not return the profit to account holders and they return it to share holders. LC returns the profit to lenders and there will be less to return to the share holders. So bank stocks should outperform LC stock unless there is an overtake.
I was a Consumer lender for a short time during the 2000's. Unsecured lending is very inefficient. It simply piggybacks the Home Equity underwriting process and is almost a nuisance to banks. Bank employees barely get incentives for origination.
LC can practically monopolize the unsecured consumer loan market. Their model is infinitely scalable. Their main competitor, Prosper, is garbage. Their portfolio growth is great and they have the right management for the business. The same people who stewarded the growth of Capital One. The credit card industry going P2P is a possibility.
This is going to be one for the textbooks on disintermediation in the financial industry due to the internet.
To compare it to a bank, one would have to compare it to a Trust Company (ie BoNY and State Street) that sells it's processing services. Not a depositor institution. Those stocks are less stellar during the regular business cycle but very steady during economic regime changes because they use operating leverage rather than financial leverage.
Anyway, I just want to hear the bearish cases. I already have blinders on for this company. I just can't pull the trigger because of the horrible stock performance.
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I was considering investing a small amount in both LC and Prosper to compare them, but haven't gotten around to it yet. I thought Prosper was a strong competitor. What are Prosper's major deficiencies?
Are you using LendingRobot and/or Nickel Steamroller to select your loans, or are you selecting them manually?