The Lending Club set its IPO Thursday (Dec. 11) at $1.5 billion higher than it said it would on Dec. 1 — valuing the company at $5.4 billion and pricing its shares at $15, instead of a $4 billion valuation and shares between $10-12.
"The strong debut lifted the company's valuation to $8.5 billion, higher than all but 14 U.S. banks," reported The San Jose Mercury News. "By the close of Wall Street trading Thursday, Lending Club's market cap nearly matched the value of Comerica and CIT Group, and surpassed the value of the remaining 820 or so U.S. banks, according to research from FactSet."
That move not only valued the company at $1.4 billion higher than initially stated, but it helped skyrocket the shares to $23.23 during morning trading, a 55 percent increase. The company also raised at least $870 million, FinExtra reported. The stock opened at $24.75 and later fell to $23.23 at midday, which gave the company a valuation closer to $9 billion.
On that Dec. 1 day when the Lending Club announced the $4 billion value, here's what the New York Times said about determining IPO pricing:
“Determining the best pricing for Lending Club’s IPO has been tricky because the company will be in a league of its own when it begins trading on the New York Stock Exchange, under the ticker symbol LC. No other alternative lender trades on the public markets, meaning that Lending Club’s bankers will have to use otherwise unrelated comparisons like nonfinancial Internet start-ups as benchmarks for the company’s performance,” the story said.
The Lending Club certainly set that set that benchmark as the shares jumped on the company's market debut. Sam Hodges, U.S managing director of Funding Circle said that P2P lending firms are "part of the new sharing economy" and said Lending Club's IPO confirms that it is a "truly disruptive force" in the lending market.
"The scale of this listing is a clear sign of the effect that peer-to-peer lending is having on finance and you can expect people to pay much closer attention now," Giles Andrews, founder of UK-based Zopa, told FinExtra. FineExtra reported that "the IPO is seen as a watershed moment" for this fast-growing market and could help other companies establish as alternatives to traditional lenders.