As consumers move increasingly to online banking, financial service firms with a well-developed digital infrastructure are poised to reap the benefits, explains Mike Cintolo, editor of Cabot Top Ten Trader.
Foremost among them is LendingClub (LC), the world’s largest peer-to-peer online lending marketplace — and now the only full-spectrum fintech marketplace bank in the U.S. thanks to its recent acquisition of Radius Bancorp.
The Radius acquisition is allowing LendingClub to build its loan portfolio, and its reliance on data science and artificial intelligence (AI) is helping it to quickly facilitate loan approvals.
LendingClub posted another fantastic quarter in Q3, boasting revenue of $264 million that was a mouth-watering 253% higher from a year ago and per-share earnings of 75 cents that crushed expectations by a mile.
Other highlights included a 42% surge in net interest income, a 7% sequential increase in average total deposits and continued growth of its member base (currently 3.8 million).
The results prompted a major Wall Street firm to substantially raise its price target for LendingClub (a reason for the strength) and inspired an upbeat forecast from management: The firm now plans to accelerate growth investments in the coming 12 to 18 months — particularly in infrastructure and new products—while remaining focused on growing profits.
The company raised 2021 loan origination guidance to $10.2 billion (up from the prior $10 billion) and sees total full-year revenue at a midpoint of $801 million (up from a prior outlook for $765 million). Analysts are equally sanguine and see the bottom line mushrooming nearly 346% in 2022. It’s a good story.
Technically, after a horrid few years, LC turned the corner this year, gapping up from 16 to 24 on record volume in July after earnings. Nine weeks of choppy progress followed, with shares kissing the 50-day line in early October.
The latest earnings inspired yet another big-volume gap higher, and the pullback of the last two weeks looks normal while volume has dried up. Dips of another couple of points would be tempting.
