Chase Ends Partnership With OnDeck, OnDeck Stock Tanks On Bucket of Mixed News
The market didn’t take too kindly to OnDeck’s Q2 earnings announcement on Monday. The stock price set a new all time intraday low of $3.01, down 24% from Friday’s close.
First, JPM Chase ended their partnership with OnDeck, the company said, bringing a 3-year relationship to a close. “We can’t speak for Chase and their change in priorities,” OnDeck CEO Noah Breslow said during the Q&A with analysts. “I don’t think it was specific to us.”
It was subsequently revealed that the relationship was never a significant moneymaker for their business to begin with. “On a standalone basis, it was a positive contributor,” the company said, but that it was “not a contributor to the bottom line profit.”
Breslow called the Chase deal a one-off that had some costs involved with it, but that they were optimistic about other deals with banks through their subsidiary ODX. “We do believe the drivers of this are not some fundamental readout on the ODX model,” he explained. “Again, we had a product that performs very well from an underwriting perspective. Customers loved it. We can’t speculate on why Chase made this particular decision. We just know it was specific to them.”
OnDeck also announced plans to pursue a bank charter and believed that the timing was right. Although they were “far along in [their] thinking,” they had not actually applied for a charter and they left the door open to possibly acquiring a chartered bank to achieve that goal. “I think the next logical milestone would be to look for some kind of either application for such a charter, but we’re not prepared to talk about a timeframe over which that would occur,” the company said.
Originations shrank to $592M, down from $636M in the previous quarter. “We do expect a return to sequential originations growth in the third quarter,” Breslow said.
The company also plans to buy back up to $50 million worth of stock to boost the share price.Last modified: July 29, 2019
Sean Murray is the President and Chief Editor of deBanked and the founder of the Broker Fair Conference. Connect with me on LinkedIn or follow me on twitter. You can view all future deBanked events here.