The stock price of LendingClub (NYSE: LC) rose by 15% Monday in the wake of the company’s latest earnings release.For its third quarter, the alternative finance company posted total revenue of $112.6 million, representing a slight decline from the same period one year ago. On the bottom line, the company swung to an adjusted loss of $15.7 million ($0.04 per diluted share) from a profit of $17.9 million.
Those figures, however, were well above analysts’ consensus expectations. The market’s prognosticators were, on average, anticipating a top line of slightly more than $103 million, and a deeper adjusted loss of $0.07 per share.
LendingClub’s results were influenced by a 12% drop in loan originations year over year to just under $2 billion. Additionally, the company said its bottom line was “negatively affected by approximately $11 million in incentives paid to investors, and approximately $20 million of unusual expenses from events related to our board review disclosures earlier this year, retention expenses and incremental legal, audit and other professional fees.”
The company’s guidance for its current quarter is that operating revenue will come in at $116 million to $123 million, while net loss should amount to $38 million to $48 million.
The better-than-expected Q3 results have brought optimism back to the stock. The earlier part of this year was turbulent for LendingClub; in addition to disappointing results, the company also saw the departure of its founder Renaud Laplanche from the CEO’s office after an internal review revealed that the company made some loans that violated its own standards. Shortly after that, CFO Carrie Dolan stepped down from her post as well.
The shares of alternative financiers have fared poorly. Both LendingClub and small business-targeting rival OnDeck Capital are down substantially since their recent IPOs. (Both hit the market in December 2014.) Although the recent rally has helped, LendingClub is still 75% down from the closing price on its first day of trading. OnDeck Capital’s stock has declined by nearly 86% over the same period.
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Eric Volkman has no position in any stocks mentioned.
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