Author Topic: LendingClub Files S-1 with SEC  (Read 18199 times)

cfb

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Re: LendingClub Files S-1 with SEC
« Reply #30 on: September 03, 2014, 04:05:33 PM »
LC not making money is fine - lots of companies do it, see Amazon; need to pay attention to why. I think LC is in good shape in this regards. Prosper is also profitable, but it behooves them to reinvest it all and a little extra (to not make a profit) to continue to build their business (and you know, maybe fix it so their accounting works right)

Amazon isn't losing money at least only to the extent they want to.  They plow their profits into R&D, warehouse upgrades and new warehouse deployments.  A lot of people miss that part.  Its a little different than running a low margin business and failing to make up the difference on the volume.  I remember in the mid 90's amazon turned a profit and Bezos was pissed about it.  He called it a 'mistake'.

BruiserB

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Re: LendingClub Files S-1 with SEC
« Reply #31 on: September 04, 2014, 04:16:08 PM »

Rob L

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Re: LendingClub Files S-1 with SEC
« Reply #32 on: September 04, 2014, 06:38:35 PM »
How many votes / replies can I get for "disruptor" being the most over used cliché term in existence today.
Wasn't it the Klingons that used disruptors?
Didn't Enron disrupt the energy trading business?
What business hasn't been disruptive to it's competitors?
It's laughable, but great marketing hype. Guess I'm just tired of hearing it. Group think.

Victor

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Re: LendingClub Files S-1 with SEC
« Reply #33 on: September 06, 2014, 12:14:51 PM »
@ Rob L: Yes, Romulans, Klingons, Breen, Cardassians, Iridians and Orions used disruptors.  Just so y'all know, I'm ashamed to even know this.  As an aside, I would like to fire a disruptor at any person who uses that term outside the context of a Star Trek episode.

DanB

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Re: LendingClub Files S-1 with SEC
« Reply #34 on: September 08, 2014, 01:58:42 AM »
How many votes / replies can I get for "disruptor" being the most over used cliché term in existence today.
Wasn't it the Klingons that used disruptors?

Didn't Enron disrupt the energy trading business?
What business hasn't been disruptive to it's competitors?
It's laughable, but great marketing hype. Guess I'm just tired of hearing it. Group think.

 In p2p, but certainly not even in the top 10 in general. (I'm thinking "terrorist" is the most overused.)  Disruptor will consciously be withdrawn by marketing (if they're not idiots) the moment the next economic downturn takes hold. it'll be replaced by more neutral tame terms like alternative etc. You can only be a disruptor when your power is relatively insignificant or on the periphery. As you become more established & your power increases, you become by definition part of the establishment & part of the problem.................& no established company likes to be painted as the problem or as a disruptor when people are losing their money, their jobs, their homes, their lives.

Besides, disruptor is a negative term. Look at Victor's list of disruptor users in the Star Trek universe. Is it a coincidence that they're all current or one time enemy aliens of the planet Earth led Federation?  The Federation & its allies use phasers.  Yes, I am able to discuss a wide range of topics.  :)

AnilG

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Re: LendingClub Files S-1 with SEC
« Reply #35 on: September 08, 2014, 02:10:09 AM »
Very good article. These two points on executive pay and relative valuations are worth taking note.

Quote
No wonder Lending Club has drawn on an eclectic list of peers to calculate its executives’ pay. They include LinkedIn, Splunk, Yelp and Angie’s List, many with sky-high earnings multiples.

MarketAxess, a bond-trading facilitator, may be the closest on the list for valuation purposes. That company trades at 22 times estimated 2016 earnings and has a near 30 percent net margin.

Lending Club managed only a 9 percent margin last year. Rising marketing and expansion costs have since pushed it into the red. To justify the $3.8 billion valuation from April’s funding round, Lending Club would need to increase last year’s $98 million of revenue almost sixfold, based on MarketAxess’ metrics.

Lending Club May Need to Justify Its Valuation

http://finance.yahoo.com/news/lending-club-may-justify-valuation-183003075.html?l=1
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Anil Gupta
PeerCube Thoughts blog https://www.peercube.com/blog
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DanB

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Re: LendingClub Files S-1 with SEC
« Reply #36 on: September 08, 2014, 05:10:03 AM »
Very good article. These two points on executive pay and relative valuations are worth taking note.

Quote
No wonder Lending Club has drawn on an eclectic list of peers to calculate its executives’ pay. They include LinkedIn, Splunk, Yelp and Angie’s List, many with sky-high earnings multiples.

MarketAxess, a bond-trading facilitator, may be the closest on the list for valuation purposes. That company trades at 22 times estimated 2016 earnings and has a near 30 percent net margin.

Lending Club managed only a 9 percent margin last year. Rising marketing and expansion costs have since pushed it into the red. To justify the $3.8 billion valuation from April’s funding round, Lending Club would need to increase last year’s $98 million of revenue almost sixfold, based on MarketAxess’ metrics.

Lending Club May Need to Justify Its Valuation

http://finance.yahoo.com/news/lending-club-may-justify-valuation-183003075.html?l=1

Anil...............What about a $5 billion valuation, which I believe is what has been discussed here as the target number for the IPO?

As for the 9% margin last year, though I completely understand your referencing it (since it's the only one to reference), I'm not sure how representative that number will turn out to be giving the rising costs you & some of us have mentioned previously.  After all, that number was derived from the only positive quarters LC has ever had, if I'm not mistaken.  As for the present, even erasing the one time IPO expenses, the current year is likely going to end up substantially in the red. So I'm not assuming that even the 9% number is some foregone conclusion. I'm guessing you agree?

rawraw

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Re: LendingClub Files S-1 with SEC
« Reply #37 on: September 08, 2014, 07:03:04 AM »
I'm not an equity analyst, but I doubt the Street will be valuing this company based on current margins. It'll be akin to Amazon

Their adjusted EBITDA for 2014 has increased relative to 2013 due to a combination of increased stock based compensation and acquisition fees.  If you look at the income statement, General and Administrative expenses rose from 13,103 in 2013 to 47,014 in 2014.  Things would've been much different without a lot of these expenses. 


AnilG

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Re: LendingClub Files S-1 with SEC
« Reply #38 on: September 08, 2014, 12:58:45 PM »
Dan,

I am waiting for Lending Club to file an updated S-1 to do proper valuation. At this point, question is can they even justify $3.8b valuation that they received during last funding round? As the article indicated and I concur, it is a difficult reach. Competition in marketplace lending has been increasing with more new platforms entering the market. Some of them seem to be gaining momentum. This will make it difficult for Lending Club to maintain their margins and growth. Is Lending Club even coming close to the growth that Prosper is showing?

But remember valuation and pricing tend to diverge significantly. So it is possible that soon after IPO, LC market cap may be in $5b range. Personally, I am trying to decide between Alibaba and Lending Club IPO who gets my "play" money. I feel Alibaba is on much more solid footing at this point.

Anil...............What about a $5 billion valuation, which I believe is what has been discussed here as the target number for the IPO?

As for the 9% margin last year, though I completely understand your referencing it (since it's the only one to reference), I'm not sure how representative that number will turn out to be giving the rising costs you & some of us have mentioned previously.  After all, that number was derived from the only positive quarters LC has ever had, if I'm not mistaken.  As for the present, even erasing the one time IPO expenses, the current year is likely going to end up substantially in the red. So I'm not assuming that even the 9% number is some foregone conclusion. I'm guessing you agree?
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PeerCube Thoughts blog https://www.peercube.com/blog
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rawraw

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Re: LendingClub Files S-1 with SEC
« Reply #39 on: September 08, 2014, 01:35:30 PM »
But remember valuation and pricing tend to diverge significantly. So it is possible that soon after IPO, LC market cap may be in $5b range. Personally, I am trying to decide between Alibaba and Lending Club IPO who gets my "play" money. I feel Alibaba is on much more solid footing at this point.
I'm at the same point.  I would 100% be with Alibaba, except for it operating in a super sketchy market.  Since it is operating in that market, I'm leaning towards LC still

rawraw

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Re: LendingClub Files S-1 with SEC
« Reply #40 on: September 08, 2014, 08:50:05 PM »
Article on valuation of Ali baba Alibaba's coming out party: Valued right, but is it priced right?

http://aswathdamodaran.blogspot.com/2014/09/alibabas-coming-out-party-valued-right.html

AnilG

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Re: LendingClub Files S-1 with SEC
« Reply #41 on: September 08, 2014, 10:14:25 PM »
Thanks for the link to the article. I really like Aswath's posts. I have read his books and papers and use his valuation methodologies for my own valuation estimates. I am more excited about Alibaba as I have used their services. If you want to build any physical product, Alibaba is the place to go to find manufacturers worldwide. While still dominantly in China, they are spreading their wings to other Asian countries and that is where I believe the growth is. I heard they are also opening office in Seattle area with focus on cloud computing similar to Amazon Web Services.

Article on valuation of Ali baba Alibaba's coming out party: Valued right, but is it priced right?

http://aswathdamodaran.blogspot.com/2014/09/alibabas-coming-out-party-valued-right.html
« Last Edit: September 08, 2014, 10:23:54 PM by AnilG »
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Anil Gupta
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toiletpaper55

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Re: LendingClub Files S-1 with SEC
« Reply #42 on: September 17, 2014, 05:36:09 PM »
...
Look at the Icesave rescue for UK & Dutch investors as an example of how a rescue occurred because it wasn't politically acceptable (among other things) for a hundred thousand mom & pop savers to get shafted despite the no guarantee nature of those speculative accounts.

To exert similar political pressure in this country you'd need perhaps half a million or so retail investors...........a number that we're not likely to get to anytime soon, thus making my initial argument of safety less secure. That is why I've been nagging about a BRV for retail investors. According to Peter that is not going to happen any time soon either.  See here:

http://www.lendacademy.com/lending-club-files-to-go-public/

Now I don't know if retail investors will or won't get pushed out like Core suggests, but if retail investors both as a percentage & as an actual number do not increase in tandem with institututionals then my concerns of safety would increase. Institutional  investors by definition accept high risk & do lose money routinely without much fanfare. Now, pls. understand that I still see the risk as small, but it's there & it's not getting smaller. Of course it would help if LC actually shows that they can make any money for longer than a few months at a time, but that's another conversation.

I hope no political pressure gets put on them, if they fail, they should fail. There are considerable protections put in place at Prosper (less so at LC) - all loans are held in a bankruptcy remote vehicle, should anything happen to the parent company. LC is less protected for retail investors (last I checked).

I couldn't find your arguments regarding more retail = more safety, but I hope it wasn't just in "political pressure" - the numbers are probably too low for any real political pressure fixes, and I get tired of bailing out people who make unsound decisions. I think that more institutional dollars = more safety. They put far more pressure on the platforms to get accounting right, far more pressure to ensure that they don't f up their credit models, and that the platforms are taking an iterative approach to changes. At this point the credit models for consumer lending are pretty baked, and they are tweaking and refining to better target and expand their originations. Institutional has more incentive and better ability to make sure i's are dotted and t's are crossed than retail will. As long as everyone is losing money together, that should be legit.

Prosper and LC are trying to rebrand as market place lending because the "peer-ness" is largely marketing at this point. >90% of the dollars at prosper are institutional. As long as retail can invest their dollars, I don't see this as a huge problem. Those people with heavy filters, might not, but that's their choice - I think being able to invest as an index across a couple of grades is sufficient to say that it's working for retail. I think it'll always be good PR, word of mouth, branding to keep a retail channel open.

Of course it would help if LC actually shows that they can make any money for longer than a few months at a time, but that's another conversation.

LC not making money is fine - lots of companies do it, see Amazon; need to pay attention to why. I think LC is in good shape in this regards. Prosper is also profitable, but it behooves them to reinvest it all and a little extra (to not make a profit) to continue to build their business (and you know, maybe fix it so their accounting works right)

Couldn't it all just be a ponzi scheme, going to public while valuations are "frothy", filing under the JOBs act with lax'd internal control requirements and screwing debt and equity investors? Worst case scenario, obviously, but stranger things have happened. The technical nature of notes being reliant on LC credit has always concerned me, especially as it increases the risk of fraud in order to keep the boat afloat should things suddenly (or even gradually) turn south. Let's hope not. And I seriously hope y'all don't place too much faith in "valuations" LOL