Author Topic: What will happen if Lending Club becomes a public company?  (Read 11019 times)

rawraw

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Re: What will happen if Lending Club becomes a public company?
« Reply #15 on: March 06, 2013, 06:48:47 AM »
Every other bond market has liquidity to varying degrees despite it being legal to get original issues in all 50 states -- some people prefer buying seasoned notes.  The only thing I view as posing a threat to liquidity is them leaving FolioFN as terrible as it is. 

rawraw

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Re: What will happen if Lending Club becomes a public company?
« Reply #16 on: March 06, 2013, 06:49:55 AM »
Just wondering...if it got listed....what is the effect on investors like us?

Restrictions by state for both borrowers and investors would be removed (currently, some states prohibit borrowers or investors on the LC platform).

I think that would be the only impact we would see.

what about the stock price of LC? given the fact that ROI is likely only going to be in the positive range (unless more people default), does it mean the stock price will only go up?
No it doesn't.  Don't invest in LC equity just because you like the platform -- there is more to stock valuations, namely Lendingclub's profitability (and expected future profitability).  If they come in below estimates, but still profitable, the stock would go down.

AmCap

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Re: What will happen if Lending Club becomes a public company?
« Reply #17 on: March 06, 2013, 07:31:09 AM »
Every other bond market has liquidity to varying degrees despite it being legal to get original issues in all 50 states -- some people prefer buying seasoned notes.  The only thing I view as posing a threat to liquidity is them leaving FolioFN as terrible as it is.

Couldn't agree more. Liquidity is essential, and I don't think the only people buying are in non-permitted states.  I wish somebody would buy the trading platform off of folio if they have no intentions of doing anything with it...at least LC and Prosper should put out proposals for it.

Zach

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Re: What will happen if Lending Club becomes a public company?
« Reply #18 on: March 06, 2013, 03:06:50 PM »
Every other bond market has liquidity to varying degrees despite it being legal to get original issues in all 50 states -- some people prefer buying seasoned notes.  The only thing I view as posing a threat to liquidity is them leaving FolioFN as terrible as it is.

Couldn't agree more. Liquidity is essential, and I don't think the only people buying are in non-permitted states.  I wish somebody would buy the trading platform off of folio if they have no intentions of doing anything with it...at least LC and Prosper should put out proposals for it.

That won't happen anywhere in the near future. The reason that Folio operates the trading platform is because they hold patents for their proprietary "window trading". I am an account holder of theirs for stock investments. Basically, for $29/month, they offer unlimited stock trades that are window orders. They have two windows, one at 11am EST and one at 2pm EST. They are extremely cost-efficient by grouping together all their orders at 11 and 2, and placing the order.

The reason LC and Prosper use Folio is because if you were trading a regular security on the market, you'd be paying at least $3-4 trade. If they switched to a strictly market brokerage firm, the costs to investors would be exorbitant.

While I'm a fan of their patented trading style and cost, their technology is somewhat lacking.

AmCap

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Re: What will happen if Lending Club becomes a public company?
« Reply #19 on: March 06, 2013, 03:54:18 PM »
I can't imagine folio's broker/dealer business would gave anything to do with the secondary note market. The notes are traded over the counter so they are just running an exchange.   I would have thought they were totally separate...no?

Zach

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Re: What will happen if Lending Club becomes a public company?
« Reply #20 on: March 06, 2013, 04:14:14 PM »
I can't imagine folio's broker/dealer business would gave anything to do with the secondary note market. The notes are traded over the counter so they are just running an exchange.   I would have thought they were totally separate...no?

I don't think so. I think every note/security is traded on their window schedules as all their stocks are.

Peter

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Re: What will happen if Lending Club becomes a public company?
« Reply #21 on: March 06, 2013, 05:51:46 PM »
Peter, perhaps ask off hand if they've thought how that exemption will apply if they eventually move the notes to a bankruptcy remote SPV.  I'm just curious.

If and when we see the bankruptcy remote SPV from Lending Club I will ask that question. But I would doubt very much that it will have a material impact because they have also said one of the goals of the IPO was to open LC to all 50 states.
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AmCap

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Re: What will happen if Lending Club becomes a public company?
« Reply #22 on: March 06, 2013, 08:57:32 PM »
Peter, perhaps ask off hand if they've thought how that exemption will apply if they eventually move the notes to a bankruptcy remote SPV.  I'm just curious.

If and when we see the bankruptcy remote SPV from Lending Club I will ask that question. But I would doubt very much that it will have a material impact because they have also said one of the goals of the IPO was to open LC to all 50 states.

Awesome - their unique structure poses all sorts of new and interesting legal questions in the securities and tax area, so I'm interested in seeing how it shakes out.