During the second quarter, online peer-to-peer lending marketplace LendingClub (NYSE: LC) generated record net revenue of $177 million on record loan originations of $2.8 billion, which represented annual growth of 27% and 31%, respectively.
Based on that information, you may think that LendingClub's stock would be soaring, but that's not the case. As of 11 a.m. EDT, shares are down by more than 10%.
The problem is that despite the growth, LendingClub didn't manage to turn a net profit for the quarter. In fact, the company's net loss of $60.9 million is more than double its loss in the second quarter last year. This was partially due to a $36.5 million goodwill charge due to its underperforming patient and education finance unit.
Excluding one-time items, the company earned $0.03 per share, but one-time expenses simply killed profitability. For the full year, LendingClub is expecting a loss of $109 million-$124 million, so it doesn't appear that the company anticipates a swing to profitability in the near future.
LendingClub's stock has been a major disappointment to investors. It is down by 32% over the past year alone and has declined by a staggering 84% since going public in late 2014.
To be clear, the company's recent growth certainly is an encouraging sign. I don't think anyone is disappointed that LendingClub is originating more loans than ever before. However, competition in the personal lending space has intensified dramatically in recent years, and unless the company starts to show that it can translate its growth into profits, I don't see the stock climbing much from its current level.
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