Stocks That Won’t Exist in a Decade: LendingClub (LC)
The Way Out: Bankruptcy OR Buyout
At this point, LendingClub Corp (NYSE:LC) looks like a binary story. LendingClub still is losing money: EBITDA was negative for full-year 2016. Originations are down as well, as LC still hasn’t quite figured out its model. The LendingClub story could end in bankruptcy, particularly if even a mild recession leads to both higher credit losses and increased difficulty in securitizing LC’s unsecured loans.
Of course, LendingClub isn’t dead yet, and there is reason for some optimism. The peer-to-peer lending model still has promise, and LC has had some success in getting larger funders back onto its platform. LC shares have risen 58% from 52-week lows, as at least a few investors are betting on a turnaround.
If that turnaround comes, then LendingClub likely becomes an acquisition target. Just as soda majors might target FIZZ for growth in new markets, traditional banks like JPMorgan Chase & Co. (NYSE:JPM) or Bank of America Corp (NYSE:BAC) would prefer to buy a successful LendingClub instead of building their own platforms.
Either way, LendingClub seems highly unlikely to an independent company ten years from now.