LendingClub Posts $32.9M Losses In 2014

LendingClub’s first post-IPO results are in, and they are not great.

The P2P lending marketplace reported a 2014 loss of $32.9M, a contrast with 2013 when the start-up reported a profit of $7.3m.  So where did the money go?  It looks like marketing and product development dollars outstripped the fees LendingClub makes from its loans – impressive given that their revenue has more than doubled to $213M.

LendingClub raised $1 billion during its IPO on the NYSE  and attained a market valuation of $9 billion on its first full day of trading. Renaud Laplanche, founder and CEO of the firm, has said that “2015 is going to be another investment year, and we intend to continue growing originations and revenue at a fast, yet deliberate pace.”

Laplanche believes 2015’s revenue will be somewhere in the neighborhood of $380M but that various non-renewing costs like acquisition expenses may well outpace earnings to the tune of $42M in 2015. He further noted that that LendingClub is anticipating making $7.6 billion worth of loans in 2015 alone – making 2015 as active as the nine years that preceded it for the company.

LendingClub, though lauded as a visionary in the alternative credit space by fans, has its share of detractors. Some argue that given the uncertain future of interest rates, LendingClub’s future profitability is not assured.  Moreover, some have wondered if the company will need to move its focus from high quality borrowers to sub-prime borrowers in order to keep up its current pace of growth.

“We believe some investors may have been disappointed with LendingClub management’s call for growth that was both fast but deliberate,” said Mark Palmer, analyst at BTIG. “We believe this was prudent, as history has shown that unrestrained growth in credit-focused businesses is not a good idea.”

On the news of the losses, LendingClub’s stock price declined by about 11 percent.

“I gave up trying to predict stock prices a few years ago,” Mr Laplanche quipped.