Author Topic: Is LendingClub getting desperate for retail investors?  (Read 7772 times)

investny

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Is LendingClub getting desperate for retail investors?
« on: March 22, 2016, 01:19:05 PM »
I just saw this ad from LC http://screencloud.net/v/Bi11

I dont recall seeing investor Prosper or LC ads before. Are the institutional investors pulling out and LC is trying to attract individual ones? I think a year ago everyone was worrying that institutions will take up all the loans and there will be nothing left for little guys.

I would say pretty aggressive ad promising pretty high returns.

nonattender

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Re: Is LendingClub getting desperate for retail investors?
« Reply #1 on: March 22, 2016, 03:35:41 PM »
"Desperate"?

They are, indeed, trying to attract more retail investors into the mix.  I think there are a lot of very smart reasons to do that right now.
A little nonsense now and then is relished by the wisest men.

lascott

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Re: Is LendingClub getting desperate for retail investors?
« Reply #2 on: March 22, 2016, 04:07:55 PM »
March 21, 2016 11:23 am
Lending Club rediscovers its peer-to-peer roots - http://www.ft.com/
Ben McLannahan in San Francisco

Quote
<snip>
High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/9e966ff2-ed48-11e5-9fca-fb0f946fd1f0.html#ixzz43fFI9cJY
<snip>
That is why he wants to cap the wholesale portion at less than 50 per cent, while spending more time building the company’s base of about 100,000 active retail investors.
“We’ve always been more exposed to retail, and I think we want to keep it that way,” he says. “We’ll probably see that as a competitive advantage, as a source of stability and predictability, particularly in an economic downturn,” Mr Laplanche says.
<snip>
Tools I use: (main) BlueVestment: https://www.bluevestment.com/app/pricing + https://www.interestradar.com/ , (others) Lending Robot referral link: https://www.lendingrobot.com/ref/scott473/  & Peercube referral code: DFVA9Y

investny

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Re: Is LendingClub getting desperate for retail investors?
« Reply #3 on: March 22, 2016, 04:26:13 PM »
Interesting. If you want to read the whole article just google the headline.

I wonder if more loan interest rate increases are coming?

Fred93

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Re: Is LendingClub getting desperate for retail investors?
« Reply #4 on: March 22, 2016, 04:53:25 PM »
I do not equate "advertising" with "desperation".  If I did, I'd have to sell my Coca Cola stock, etc.

RL has consistently and frequently said that he wants to maintain the retail investor side of the business.  He's putting some money where his mouth is.  Good for him.

If retail investors want LC to continue to be interested in your needs, this is a good development.  It indicates that RL is serious about wanting to maintain and grow a retail investor base.  The alternative would be for the institutional lender mass to grow and grow and make the retail investor completely irrelevant (as is happening at Prosper, etc).

dompazz

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Re: Is LendingClub getting desperate for retail investors?
« Reply #5 on: March 22, 2016, 05:20:33 PM »
The wholesale guys swing a crap load of money around.  This is attractive to a platform, especially if you are a "me-too" trying to get up an running.  However, that source of funds is not robust.  It only takes 1 or 2 big funds to pull capital and your source of funds has effectively dried up.

For LC, it seems to be about diversification.  For the same reason we buy lots of small loans, LC is trying to attract lots of small investments. 

Fred93 is right, this is a good thing for us retail investors.  It means LC has a vested interest in making sure we are happy.  The next "me-too" might try to focus on retail investors and will try and pull us away. 

Small Fish Big Pond

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Re: Is LendingClub getting desperate for retail investors?
« Reply #6 on: March 22, 2016, 06:02:15 PM »
I do not equate "advertising" with "desperation".  If I did, I'd have to sell my Coca Cola stock, etc.

RL has consistently and frequently said that he wants to maintain the retail investor side of the business.  He's putting some money where his mouth is.  Good for him.

If retail investors want LC to continue to be interested in your needs, this is a good development.  It indicates that RL is serious about wanting to maintain and grow a retail investor base.  The alternative would be for the institutional lender mass to grow and grow and make the retail investor completely irrelevant (as is happening at Prosper, etc).

Agreed, if anything a sign of confidence in the product. Word of mouth will only take you so far. If you want to become one of the big boys, you need to get your name out there. If you asked 10 of your friends not in LC, how many would say they have ever heard of it? Name recognition is also another benefit of advertising not only for investors but borrowers too.

RT45

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Re: Is LendingClub getting desperate for retail investors?
« Reply #7 on: March 23, 2016, 12:31:33 AM »
No different than a traditional bank. Use the long tail of free retail checking accounts to fuel other areas of lending.

rawraw

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Re: Is LendingClub getting desperate for retail investors?
« Reply #8 on: March 23, 2016, 05:16:47 AM »
Big money gets spooked.  If LC was all big money, there is a real risk volumes could dry up overnight due to something either LC or systemic related and they swing to a huge quarterly loss. 

nonattender

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Re: Is LendingClub getting desperate for retail investors?
« Reply #9 on: March 23, 2016, 09:17:19 AM »
Big money gets spooked.  If LC was all big money, there is a real risk volumes could dry up overnight due to something either LC or systemic related and they swing to a huge quarterly loss.

While that may be true - and may be what is getting attention - the dynamic reason to diversify capital base - especially for a publicly
traded platform - is to ensure that the platform does not become captive to (and lose pricing power to) a concentrated investor base.

I don't think many people have figured out exactly what kind of leverage one has over a platform when one funds most of the loans...

Practically every other platform has that problem to a much larger degree than LC - and some are even plotting further concentration,
hoping to capture a huge percentage of funding volume, thereby giving themselves control, if not ownership, without having to buy it.

I find it heartening that LC's management has seen this and is acting in the interests of its shareholders as well as its retail investors.
A little nonsense now and then is relished by the wisest men.

cdforever

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Re: Is LendingClub getting desperate for retail investors?
« Reply #10 on: March 23, 2016, 12:17:18 PM »
I can't speak for LC but as a current Prosper attempted-borrower, it seems that there are far more borrowers than investors so I can see the need to advertise.

I don't know if funding statistics are available but you only need to browse listings and follow them to the end to see how many loans are going unfunded. Good, 'A' rating loans with interest rates in the 8-10 range are just sitting there.

They have been pushing to borrowers in a big way, makes sense to try to reel in the other side. 

rawraw

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Re: Is LendingClub getting desperate for retail investors?
« Reply #11 on: March 23, 2016, 07:31:24 PM »
Big money gets spooked.  If LC was all big money, there is a real risk volumes could dry up overnight due to something either LC or systemic related and they swing to a huge quarterly loss.

While that may be true - and may be what is getting attention - the dynamic reason to diversify capital base - especially for a publicly
traded platform - is to ensure that the platform does not become captive to (and lose pricing power to) a concentrated investor base.

I don't think many people have figured out exactly what kind of leverage one has over a platform when one funds most of the loans...

Practically every other platform has that problem to a much larger degree than LC - and some are even plotting further concentration,
hoping to capture a huge percentage of funding volume, thereby giving themselves control, if not ownership, without having to buy it.

I find it heartening that LC's management has seen this and is acting in the interests of its shareholders as well as its retail investors.
Them being publicly traded doesn't change the economics of being beholden to large investor base.  I don't think you have to be retail to make money, but it is a benefit.  but that doesn't come without its own costs that wouldn't be experienced otherwise

newstreet

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Re: Is LendingClub getting desperate for retail investors?
« Reply #12 on: March 26, 2016, 12:23:59 PM »
I just saw this ad from LC http://screencloud.net/v/Bi11

I dont recall seeing investor Prosper or LC ads before. Are the institutional investors pulling out and LC is trying to attract individual ones? I think a year ago everyone was worrying that institutions will take up all the loans and there will be nothing left for little guys.

I would say pretty aggressive ad promising pretty high returns.

Yes they are......recent downgrades of the prosper and circleback deals, in addition, the  decreasing returns have reduced institutional appetite significantly.  Sofi can't find any buyers so they are starting a fund...They have to originate to stay alive.  The one positive  is that they are actually spending the cash they to increase origination.  The face that couldn't find a better use for cash than a buyback in less than 12 months after the offering is ridiculous.

newstreet

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Re: Is LendingClub getting desperate for retail investors?
« Reply #13 on: March 26, 2016, 12:26:21 PM »
I just saw this ad from LC http://screencloud.net/v/Bi11

I dont recall seeing investor Prosper or LC ads before. Are the institutional investors pulling out and LC is trying to attract individual ones? I think a year ago everyone was worrying that institutions will take up all the loans and there will be nothing left for little guys.

I would say pretty aggressive ad promising pretty high returns.

Yes they are......recent downgrades of the prosper and circleback deals, in addition, the  decreasing returns have reduced institutional appetite significantly.  Sofi can't find any buyers so they are starting a fund...They have to originate to stay alive.  The one positive  is that they are actually spending the cash they to increase origination.  The face that couldn't find a better use for cash than a buyback in less than 12 months after the offering is ridiculous.



From WSJ Yest  "A bond offering based on a batch of personal loans made by Prosper Marketplace Inc. got a cold reception late Thursday, the latest sign of investor skittishness toward fast-growing online lenders"........investors demanded another 500 basis points....prosper is in big trouble