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Messages - Xenon481

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16
Investors - P / Re: Prosper files Q1-2013 10-Q with the SEC
« on: May 18, 2013, 09:39:52 AM »

17
Investors - P / Re: Is Prosper turning around?
« on: April 12, 2013, 03:35:17 PM »
IMHO, Prosper should focus on being "profitable" rather than being big.

Part of the challenge of running a business of this type is the volume of loans required in order to be profitable. Most of Prosper', and Lending Club for that matter, revenue is generated from the origination of loans. So while they might not be trying to overtake Lending Club's volume per se, they absolutely need to reach a point where their volume can provided operational profitability.

Also keep in mind that as Prosper's originations revenues have increased, their operating expenses have increased at even faster paces. They have been getting further and further away from profitability as their loan volume has increased due to a failure to be able to properly scale their platform operational expenses.

18
Investors - P / Re: Worth-Blanket Investing 100% of Loan Values
« on: April 02, 2013, 09:08:14 AM »
[...]nor do I see where Peter has, in this case, really shared any information coming from Prosper.

Peter has on many occasions stated that he has had conversations with Prosper Management and often shares information about future changes to the platform from those conversations.

Even in this thread, Peter states:
Quote
From conversations I have had they [Prosper] have said they will try to make a more level playing field for retail investors and part of that is a formal loan program with a 75% cap for investors on the regular platform

In another thread, Peter states:
Quote
So I asked the Prosper COO this exact question yesterday and while there are no guarantees when dealing with government agencies they are working through the issues that the regulators in WA want and expect to be back on board "soon".


Again, I am not stating an opinion upon whether or not Prosper is using the SEC as an excuse to not make public statements directly nor whether or not such an excuse would be valid. However, it cannot be denied that Prosper is in giving public statements to Peter. And if Prosper truly were using the SEC as an excuse for not making public statements then they shouldn't be making public statements to anybody including Peter.

I don't understand why you think that anything that I've said in this thread sounds like anti-Prosper agitation; In fact, none of my posts in this thread have said a single negative thing about Prosper and have actually thrown support to the idea that Prosper is likely not using the SEC as an excuse for not making public statements because they obviously are making public statements.

And if you are taking my other posts on this forum as attempts at pure anti-Prosper agitation, then I am sorry that you seem so blindingly enamored with Prosper that you seemingly refuse to look at objective facts and history which should be a part of any investment risk assessment.

19
Investors - P / Re: Worth-Blanket Investing 100% of Loan Values
« on: April 02, 2013, 08:12:51 AM »
Peter, if they're reading, why don't they chime in to provide answers? SEC issues?

If that were true then they shouldn't be talking to Peter either.

Xenon............I sometimes wonder what other planet you come from..............which may go some way in explaining your "interesting" view of reality on this one.  :)

zpbsfg asked if Prosper's reasoning for not making public statements on this forum was because they think the SEC regulations are preventing them from doing so outside of official SEC channels.

I have no knowledge of whether or not that is their reasoning nor am I stating any opinion on whether or not such reasoning is even valid.

I am just pointing out that if that truly was Prosper's reasoning, then making statements to a member of the public (owner of the forum in question, no less) known to publish information on that forum is in fact releasing such statements themselves via a Public Relations proxy.

20
Investors - P / Re: Worth-Blanket Investing 100% of Loan Values
« on: April 02, 2013, 12:24:44 AM »
Peter, if they're reading, why don't they chime in to provide answers? SEC issues?

If that were true then they shouldn't be talking to Peter either.

21
Investors - P / Re: Tax Question
« on: March 31, 2013, 07:55:11 PM »
Are you hinting that each loan should be listed individually?

That is my non-tax professional understanding of the situation and matches what my tax professional (who also previously invested in Prosper before becoming disillusioned by their management) did when my taxes used to contain Prosper losses.

22
Investors - P / Re: Tax Question
« on: March 30, 2013, 09:07:28 PM »
This is not tax advice and I am not a tax professional.

One thing to think about is that each note that you purchase is a separate investment with and Prosper constantly updates the Prospectus with the SEC for every individual loan, thus changing the nature of the investment.

23
Investors - P / Re: Prosper files 2012 10-K with the SEC
« on: March 28, 2013, 06:35:08 PM »
I don't think access to programmers enters into the equation - there are plenty of places with qualified people in that area. I think the reason they are in SF, and keep in mind they moved there from the relatively low rent Redwood City in 2011, is access to capital. There are plenty of VC's, hedge funds, and other large financial institutions with money in SF and that is why they chose to locate there in my opinion.

Prosper has ALWAYS been headquartered and had most of their on-shore staff located in San Francisco at the current 111 Sutter Street, 22nd Floor location. An extremely high rent office.  All the way back to 2006.

24
Introductions / Re: Hello fellow p2p players
« on: March 23, 2013, 09:52:56 AM »
When it comes to information about Prosper, you may also want to read through the threads in The Lobby portion of the forums at Prospers.org.

http://www.prospers.org/forum/index.php

And also be aware that there is an active Class Action Lawsuit against Prosper which has the potential to bankrupt it if the judgement goes against them:

http://prosperclassaction.com/

25
Investors - P / Re: Prosper files 2012 10-K with the SEC
« on: March 21, 2013, 06:03:44 PM »
increased top-line numbers should reduce the burn rate.

That has not been true for essentially the entirety of Prosper's post-SEC existence; and this can be seen in the list of quarterly losses in my post.

Other than a few minor and temporary blips, Prosper's burn rate has historically continued to increase (often dramatically) even as their top-line revenues increase. Prosper has thus far been unable to scale their revenues in line with (let alone ahead of) their expenses. For every $X that they add in revenues, they seem to keep adding Y% even more in expenses.

Quote
I expect a reduced burn rate from Q4 2012.

I did give an extrapolation for a ~10% reduced burn rate; It's the one where they would have ~15 months before needing an additional VC infusion.


Past performance is not a guarantee of future results (especially as situations change), but in this case, it is enlightening to look at the trends.

26
http://www.sec.gov/Archives/edgar/data/1416265/000114036113013123/form10k.htm


Q2 2009 - Loss before other income: $2,617,400
Q3 2009 - Loss before other income: $2,289,092
Q4 2009 - Loss before other income: $2,868,908
Q1 2010 - Loss before other income: $2,747,524
Q2 2010 - Loss before other income: $2,787,434
Q3 2010 - Loss before other income: $2,404,217
Q4 2010 - Loss before other income: $2,566,804
Q1 2011 - Loss before other income: $3,097,283
Q2 2011 - Loss before other income: $2,837,560
Q3 2011 - Loss before other income: $2,837,290
Q4 2011 - Loss before other income: $3,519,037
Q1 2012 - Loss before other income: $4,690,488
Q2 2012 - Loss before other income: $3,545,603
Q3 2012 - Loss before other income: $4,448,773
Q4 2012 - Loss before other income: $4,764,596
Q1 2013 - Loss before other income: $4,504,040

The average quarterly burn rate for 2012 was $4,362,365 which is ~43% higher than 2011's average quarterly burn rate.

At the end of 2012, Prosper had $2,300,073 in "Cash and cash equivalents" (cash and treasuries). In January 2013, they received another round of VC funding of ~$20m, so that puts Prosper at essentially $22.3million in known cash reserves.

- If 2012 Q4's burn rate was to hold constant, then Prosper would need another VC infusion in ~14 months from the end of 2012 (~Feb 2014).
- If 2013's average burn rate holds closer in line with 2012's average burn rate, then Prosper would need another VC infusion in ~15 months from the end of 2012 (~Mar 2014).
- If 2013's average burn rate is 20% higher than 2012's, then it is just ~13 months (~Jan 2014).
- If 2013's average burn rate is 30% higher than 2012's, then ~12 months (~Dec 2013).
- 40% higher average would be ~11 months.


- Prosper spent an average of ~$861k/month on salaries and benefits.
- Prosper spent an average of ~$474k/month on marketing. 30% of which was spent in Q4.
- Prosper spent an average of ~$276k/month on "Professional Services" which is primarily legal fees for the Class Action.
- Prosper spent an average of ~$110k/month on rebates and promotions.
- Prosper spent an average of ~$102k/month on facilities and maintenance.


Edit: Added Q1-2013 loss to the list

27

Just to make this apples to apples, remember we are talking about P2P.  P2P is unsecured consumer debt.

Actually, it is even worse than that.

P2P (in its current form at both LC and Prosper) is unsecured corporate debt (the notes you purchase are obligations of LC/Prosper and specifically not obligations of the end borrower) in which the corporation (LC/Prosper) has the option to not return principal/interest based upon certain not-unlikely circumstances (borrower not making payments on their unsecured consumer debt, LC/Prosper summarily changing the terms of the borrower loan, etc).

Since these notes are unsecured obligations of the corporation, they are subordinate to all prior unsecured obligations of the corporation. In the case of Prosper, that puts any new notes that you purchase subordinate to ~$150+million in already outstanding corporate debt. Since that corporate debt is mostly offset by the assets that the corporation owns (the borrower loans themselves), this might be ok in most cases.

However, in the kind of circumstance that Prosper is in with an active Class Action Lawsuit against them (with a potential ~$46+million judgement), a judgement against the corporation which exceeds the non-loan assets of the corporation may have senior rights to the loan assets, potentially causing subordinate note holders to be left with either nothing or a significantly reduced value.

While Prosper has re-organized themselves into PMI and PFL, they only did so significantly after the class action was started and so it is potentially likely that the loan assets that PMI transferred to PFL will still be accessible to any judgement in favor of the class, although it is less likely that the class would have access to PFL's non-transferred assets (but a large judgement might very well bankrupt both PMI and PFL).

28
Investors - P / Re: Divesting from Prosper
« on: March 12, 2013, 01:24:23 AM »
There's also not an active potentially bankruptcy inducing Class Action Lawsuit against LC.

29
So I asked the Prosper COO this exact question yesterday and while there are no guarantees when dealing with government agencies they are working through the issues that the regulators in WA want and expect to be back on board "soon". Now, they can't commit to a timeline because it is not up to them but I got the feeling it is only a matter of weeks.
So here we are, Peter, another month down the road, and in WA we still can't invest it notes or even sell the notes we have... this is getting very frustrating!

And there is still no legal/regulatory reason why Prosper should be preventing WA note-holders from selling their notes to non-WA residents.

30
General P2P Lending Discussion / Re: Anybody heard of these websites?
« on: March 11, 2013, 10:56:00 AM »
"This site is one, credit karma"

I belong to Creditkarma.  It's a free credit monitoring site.  I don't believe it's affiliated with Prosper pr any P2P site at all.  They appear affiliated with credit card companies only.

CreditKarma is a Chris Larsen company. Chris Larsen was Prosper's founder and CEO and board member up until the latest new regime of management. I haven't looked at CreditKarma in quite a while, but last time that I did, they had tons of advertisements pointing towards Prosper.

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