Lending Club Shares Remain Under Pressure

  • JJ Hornblass
  • May 13, 2016
  • 0

canstockphoto12552402The firing of Renaud Laplanche at Lending Club has not stemmed the stock’s decline, and some market observers are starting to say that the online marketplace company might go into a financial “death spiral.”

The issue was and is trust. Apparently, the errant sale of loans to Jefferies & Co. was not just about skirting business ethics. Lending Club purportedly played many investors hard, pitting them against each other to extract the best yield, as opposed to “cultivating relationships,” which is Wall Street-speak for not sucking every last basis point out of every last investor transaction.

Lending Club didn’t need those “relationships” on its way up, when demand was high for Lending Club assets. But on its way down, the lack of “relationships” inclines investors to suck every last drop of value out of Lending Club — and that could cause a death spiral. As the lack of trust in Lending Club amplifies, it becomes exceedingly difficult for it to find investors to buy its assets, who don’t much care about Lending Club, because of its aggressive business tactics. And without buyers … well, you get the picture.

Lending Club stock is down 49.2% since May 9, when the Laplanche news hit, and already down about 4% today, at 10:55 am ET. The company still has a market capitalization of $1.25 billion. For now.

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JJ started the first iteration of Bank Innovation back in 2007, and has been working on it ever since. He also serves as President & Chief Executive Officer of Royal Media, Bank Innovation’s parent. He founded Royal in 1995 and oversees all aspects of the New York-based diversified media company. Prior to forming Royal, JJ was on the editorial staff of American Banker, the daily newspaper, and worked as an editor of a business magazine in Hong Kong. As a reporter and editor, he has won journalism awards from the National Press Foundation, Newsletter & Electronic Publishers Foundation, and the Reader’s Digest Foundation. He has a BS in Economics from Yeshiva University and a Master’s from the Columbia University Graduate School of Journalism. He was also a Fellow at the University of Wisconsin-Madison Graduate School of Banking. He lives in New York City with his wife, two daughters, and son. He counts among his accomplishments one New York City Marathon, two New York City Triathlons and the 2010 Father’s Day 5K, the first race he ever ran with his daughters. He can be reached at hornblass@gmail.com or 212-564-8972.

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