Online Lenders Plummet Simultaneously to All-Time LowsJanuary 14, 2016 | By: Sean Murray
If it was involved in online lending, investors dumped it on Wednesday January 13th. LendingTree, a consumer lending platform, dropped nearly 30% for the day despite reporting positive results.
OnDeck closed at a new all-time low of $7.33, a drop of almost 14% for the day.
Lending Club also closed at a new all-time low. They finished at $8.86, after a comparably modest drop of 6.5%.
Enova International, the company that acquired The Business Backer back in August, closed at an all-time low. At $5.58, their stock dropped 3.13% for the day.
Square, a payments company with a substantial merchant cash advance operation, was down 4%, but they did not break the record for the all-time low they had just set six day earlier.
Yirendai, a Chinese peer-to-peer lender on the New York Stock Exchange, also managed to escape an all-time low despite being down 1.55%. Their all-time low record was also set just six days earlier.
For comparison’s sake, the S&P 500 was down 2.5% on the day. The continuous beating for online lenders, which can’t seem to catch a break in the market, is especially ominous because the economy is not in a recession and there are no indications that any of their business models are legitimately threatened. Nearly a decade since the beginning of the financial crisis, it’s apparently still cool to hate lenders. For LendingTree in particular, the precipitous drop on POSITIVE news was ugly enough to make the headlines in the New York Post. “LendingTree stock was sliced, diced, creamed and puréed,” the Post wrote.
Out there, the little guys who took a leap of faith to support fintech disruption seem like they’re preparing to riot in the streets:
— TheMoneyTeamTMT (@TheMoneyTeamTMT) Jan. 13 at 03:42 PM
This is absurd $LC …this stock is either complete sh*t or we're going to have a monster rally
— Alex (@ROIRogers) Jan. 13 at 03:25 PM
— Mark Holder (@StoneFoxCapital) Jan. 13 at 01:42 PM
— BasicNews (@BasicNews) Jan. 13 at 11:49 PM
$SQ Here's another garbage company with bloated forward earnings, all these p o s stocks headed way lower
— QEBubble (@QEBubble) Jan. 13 at 05:18 PM
$LC F* this!
— Don Juan (@fluppy) Jan. 13 at 02:56 PM
$LC selling into oblivion. wtf
— Bork Bork (@calicat) Jan. 11 at 05:00 PM
Perhaps contributing to the damage in Lending Club’s case is that company executives have been dumping their shares over the last several months despite the stock constantly hovering near all-time lows. It certainly doesn’t show a lot of short-term confidence that something is going to change soon.
Insider selling is not the issue in OnDeck’s case which hasn’t really had any. While they were most likely just collateral damage from today’s unyielding carnage, Noah Breslow proclaimed on Squawk Box prior to the opening bell that OnDeck was regulated like a “non-bank commercial lender,” one of those rare characterization departures from their supposedly being a tech company. Aside from that was the sobering letdown that disrupting banks may have never been the goal for them or for online lenders. In a recent article by Broadmoor Consulting’s Todd Baker, he argued that “disruptor” has been the wrong word used to describe many of these companies and that their potential may only go as far as to digitally “enable” banks who are struggling with lagging technology to enable themselves in the modern era. Sound boring? Maybe there’s something bigger in play.Last modified: January 14, 2016
Sean Murray is the founder of deBanked, an 11-year veteran of the merchant cash advance industry, a casual Lending Club and Prosper note investor, the co-founder of Daily Funder, an alternative lending speaker, consultant, writer, and enthusiast. Connect with me on LinkedIn or follow me on twitter.