Author Topic: LC stock spikes on Citigroup talks  (Read 5664 times)

Fred93

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Re: LC stock spikes on Citigroup talks
« Reply #15 on: June 01, 2016, 08:50:24 PM »
How has LC and Prosper been able to originate the volume they have with an apparent lower cost (and better name recognition) provider in the same space. Something doesn't compute. There's gotta be a difference we're not taking into account.

Look at the shareholder presentations on LC's investor relations page, or watch Renaud's lendit talks.  He shows viewgraphs comparing costs, and these viewgraphs claim that LC's costs are lower than the banks' costs.  Difficult to make apples vs apples comparisons of course, so I've never really understood the costs thing.


nonattender

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Re: LC stock spikes on Citigroup talks
« Reply #16 on: June 02, 2016, 09:19:25 AM »
I really don't get it. DFS has been in direct competition with LC & Prosper for years but this is the first I've heard of it. Maybe I live under a rock but it seems it would have been discussed here somewhere along the way. How has LC and Prosper been able to originate the volume they have with an apparent lower cost (and better name recognition) provider in the same space. Something doesn't compute. There's gotta be a difference we're not taking into account.

Cannibalization/Preservation + Opportunity/Addressability

The card banks have probably been waiting to see whether it was worth the risk of cannibalizing their balance xfer products (similar margins to the origination fees of LC/P) to come in and compete.  Now that they can sort of tell, via credit profile, who is already the customer they've lost - and now that that's not insignificant and is worth the tooling up - some of them seem to be coming to play...

You don't swat the fly until it bothers you enough that it's worth getting up and making a fly-swatter out of something to go swat it.
(The people saying that DFS has done personal loans for years are correct, but it's not been at these terms, not been all online, not been so wide open to non-DFS customers, not been at these low rates, and, probably most importantly, not really been advertised.)

Someone made the decision to crank up the marketing spend, at just the time that they launched their CreditKarma clone site, too...
A little nonsense now and then is relished by the wisest men.

Rob L

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Re: LC stock spikes on Citigroup talks
« Reply #17 on: June 02, 2016, 10:23:04 AM »

Cannibalization/Preservation + Opportunity/Addressability

The card banks have probably been waiting to see whether it was worth the risk of cannibalizing their balance xfer products (similar margins to the origination fees of LC/P) to come in and compete.

Kinda reminds me of the dilemma Telco's faced in the early days of the internet and digital transport services. They had these hugely profitable dedicated corporate high speed leased lines (T1, T3, etc.) and I'm sure it was tough to let them go. Think they hung onto them until they lost enough customers to much less expensive alternative services and then finally decided offer the same themselves. It was always obvious (especially to them) that they would have to do so. It was a matter of timing to squeeze the most out of the old lucrative business until forced by technology and competition to move forward.