5 Things You Should See in the Lending Club IPO Registration Statement

http://pebama.cz/1088-dtcz66559-javorník-gay-seznamka.html As most of you know by now, Lending Club is going public on Thursday. They are allocating some shares for retail investors like you and me. As part of their Direct Share Purchase program (DSP) with Fidelity, all potential investors get to see a copy of the Prospectus with S-1 SEC filing that LC filed with the Feds.My amended S-1 that I got came from Fidelity.

where can i buy Pregabalin If you are a little retail investor and you are considering investing in LC stock, then here are 5 things you should notice that are in the Prospectus and the amended S-1. The non-amended version can be found here at the SEC site.

Profit to Loss

neurontin 900 mg day LC went from a profit in 2013 to a sizable loss in the first 6 months of 2014. You can see this below. The most updated S-1 has information through September but the result is the same.

http://towing-whittier.com/forum/viewtopic.php?page=jack-bruce-tribute-concert-0f1283 Net Income per S-1

Here you see that we have Income at year end 2013 of $7.3 million declining to a loss of $16.4 million for the first 6 months of 2014 and the loss extends to $22.7 million for 2014 through Sept (S-1. p.11). The upside is the increase in Revenue from $98 million in 2013 to $86 for only 6 months of 2014 implying Revenue of over $170 million for all of 2014. The Sept 2014 Revenue number is $143 million (S-1, p.11) so they are well on their way.

However, the trend is expecting to continue in the negative as they list on p. 14 of the S-1 and as seen below.

Net losses per S-1This is something we should be aware of and the amended S-1, p.14, says the accumulated deficit (Negative Equity) is not $66.8 million but $74.2 million. Since stocks often trade on some multiple of the P/E ratio (Price to Earnings), these continued net losses could impact the stock price for years to come.

Increased Costs

Tied into #1, LC is expecting increased costs for years to come as a result of their growth and going public (S-1, p.32)

Inc costs per S-1

This is an important consideration as to whether you think LC can get back to profitability.

International Expansion

Per S-1 p.26, Lending Club plans to expand internationally. Is this good or bad or neither? The online nature of their platform certainly makes this possible but each country has its own securities and compliance laws. It's probably a net positive long term but its something you should be aware of.

International exp per S-1

Again, this will increase costs too. It's a very ambitious plan and I kinda dig that.

No Dividends

As a growing company, and like most growing companies, LC will not be paying dividends so the same Income sought by investors who lend on their platform will not be available by investing in the stock. See on p.38 and below.

No Divs per S-1

To many people this is expected or no big deal but if you thought you could generate income from the stock the same way you do investing in p2p loans, then you need to know this.

Bankruptcy favors P2P Lenders over Stockholders

There is reason to believe that in the event of a Lending Club bankruptcy or similar need to liquidate that those of us who invest in the loans on the platform may be in a senior position to the stockholders. Good news for us lenders, not as good news for the stockholders.  See on p.39 of the S-1

BK favor lenders per S-1

It does say MAY be senior and not IS DEFINITELY senior but something to keep in mind

Conclusion

It may sound like I am personally against the idea of buying LC stock but that's not true. I have signed up for the Fidelity account in case I want to buy some for myself. What I want to be sure my fellow retail investors understand are some of the things in this complex S-1 and prospectus document so they can decide for themselves. There's a chance that LC never gets back to profitability and there's also a chance it becomes the next Google. No one knows what will happen but these 5 points here are to illustrate some of the things you should look at when deciding whether or not to buy the stock.

About the author

Stu Stu Lustman, the author of this post, is a Credit Analyst by trade trying to bring Commercial Credit Analysis techniques to the world of Peer to Peer Lending. Check me out on Twitter, LinkedIn and Google+

3 thoughts on “5 Things You Should See in the Lending Club IPO Registration Statement”

  1. Nice post. I learn something new and challenging on sites
    I stumbleupon everyday. It will always be helpful to read through articles
    from other writers and practice something from their websites.

    Reply

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.