IB Net Payout Yields Model

LendingClub: Still A Stumbling Grower

After the close on Tuesday, LendingClub (LC) reported results that again disappointed the market. The stock is down about 7% to $3.35 providing an incredible value assuming the management team ever figures out how to impress the market with 20% growth.
The stock has a market cap of about $1.4 billion with a 2019 revenue estimate of about $800 million. So the stock isn't expensive on a P/S multiple even with these disappointing Q4 numbers and 2019 guidance:

Q4 Results
  • Q4 Non-GAAP EPS of -$0.01 misses by $0.03
  • Revenue of $181.5M (+16.0% Y/Y) misses by $0.65M.
Q1/2019 Guidance
  • Q1 net revenue of $162M-$172M vs. consensus of $181.8M 
  • Adjusted net loss of $15M-$20M 
  • FY2019 of $765M-$795M (consensus of $804.3M) 
  • Adjusted net loss of $9M to $29M.
  • Adjusted EBITDA of $115 to $135 million 
The company suggests a desire to slow down loan growth due to macroeconomic conditions. The numbers look a lot worse due to the move to not exclude SBC from the adjusted net loss. The adjusted EBITDA is targeted to reach $125 million for the year for nearly 30% growth off the 2018 based of $97.5 million.

The amazing part is that LendingClub has nearly $800 million in cash and loans that leads to an enterprise value below $800 million or 1x sales estimates.

Cash:                              $543.4M
Net Loans:                     $236.6M
Total Cash/Net Loans:   $780.0M

Not the greatest news, but the platform continues to grow and expand EBITDA at a solid clip. The stock shouldn't trade at a bargain basement price of EV/S of 1x.

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Disclosure: Long LC. Please review the disclaimer page for more details. 


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