We feel now is a pretty good time to analyse LendingClub Corporation's (NYSE:LC) business as it appears the company may be on the cusp of a considerable accomplishment. LendingClub Corporation, operates as a bank holding company for LendingClub Bank, National Association that provides range of financial products and services through a technology-driven platform in the United States. With the latest financial year loss of US$188m and a trailing-twelve-month loss of US$187m, the US$1.6b market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is LendingClub's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
According to the 4 industry analysts covering LendingClub, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$40m in 2022. So, the company is predicted to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 64% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for LendingClub given that this is a high-level summary, but, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one issue worth mentioning. LendingClub currently has a debt-to-equity ratio of 153%. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
There are too many aspects of LendingClub to cover in one brief article, but the key fundamentals for the company can all be found in one place – LendingClub's company page on Simply Wall St. We've also put together a list of relevant factors you should further research:
Historical Track Record: What has LendingClub's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on LendingClub's board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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