According to https://www.lendingclub.com/info/statistics.action" class="bbc_link" target="_blank">https://www.lendingclub.com/info/statistics.action, total loans issued on 9/30/2014 is ~$6B. Adjusting for the loans that are paid in full, charged off, etc., it is safe to assume there are no more than $5B in outstanding loans.
Now, LC charges 1% of the investor's cash flow (excluding loans paid off prematurely). What is the cash flow? Best case scenario is that most of the loans are 36 months, which gives us ~45% of currently outstanding loans as yearly cash flow. Any adjustment for 60-months loans will decrease this number.
Therefore, LC's yearly net revenue has an upper bound of 0.01 * 0.45 * $5B = $22.5M. However, the IPO prospectus reads "For the nine months ended September 30, 2013 and 2014, our total net revenue was $64.5 million and $143.0 million, respectively".
According to my estimate, total net revenue for nine months ended September 30, 2014 cannot exceed 0.75 * $22.5M = $16.875M, which is almost nine times less than declared. What am I missing?
Now, LC charges 1% of the investor's cash flow (excluding loans paid off prematurely). What is the cash flow? Best case scenario is that most of the loans are 36 months, which gives us ~45% of currently outstanding loans as yearly cash flow. Any adjustment for 60-months loans will decrease this number.
Therefore, LC's yearly net revenue has an upper bound of 0.01 * 0.45 * $5B = $22.5M. However, the IPO prospectus reads "For the nine months ended September 30, 2013 and 2014, our total net revenue was $64.5 million and $143.0 million, respectively".
According to my estimate, total net revenue for nine months ended September 30, 2014 cannot exceed 0.75 * $22.5M = $16.875M, which is almost nine times less than declared. What am I missing?