Happy New Year! I hope you enjoyed the arrival of the new year last night whatever you did. As for me, I am getting ready to go on a big trip, so it has been a busy holiday weekend for me. Tomorrow, my family is flying to Sydney (my home town) for an extended visit. So, you won’t be hearing much from me for several days until after we get settled in.
Here on the first day of 2012 the entire year lies before us, full of possibilities. So I have spent some time peering into my crystal ball to come up with five p2p lending predictions for 2012.
1. Lending Club Will Reach $1 Billion in Total Loans
Lending Club closed 2011 with $460 million in total loans issued since their inception in 2007, more than half of which were issued this past year. I expect they will issue around $550 million in new loans in 2012 bringing their total loans issued to over $1 billion. The high watermark in new loans issued will be somewhere just over $60 million a month, roughly double what they did in December, 2011.
2. Prosper Will Reach $500 Million in Total Loans
Prosper will also keep their growth record going albeit with smaller numbers than Lending Club. Prosper issued $75 million in loans in 2011 to bring their total since inception to $290 million. I expect 2012 to be a banner year for Prosper with a three-fold increase in volume from 2011. This should take them past $500 million in total loans issued with a high watermark in monthly volume of around $24 million.
3. Lending Club Will Post a Profitable Quarter
I predict by the third quarter of 2012 Lending Club will be close to break even (based on the financials in their SEC filings) and will post a profitable fourth quarter. I don’t expect to see much improvement in the first half of 2012 as they are really focusing on growth. But I think we will see some dramatic improvement in their bottom line performance in the second half of the year.
4. A Third Competitor Will Take on Lending Club & Prosper
For several years now p2p investors have really only had two choices. Some, such as Loanio have tried and failed. Others have had big ideas but have failed to get off the ground at all. Now, we have Peerform that has been in operation for over nine months and seem to be getting at least some traction. There are also many operations that are in stealth mode and I expect one of these newcomers will pick up some traction in 2012. It would be great for everyone to end the duopoly that we have in this industry. Although, for a newcomer to attract investors there will really need to be the promise of something as good or better than what is currently available.
5. More States Will Become Available for Investors
Ok, so this one is more of a hope than a prediction but I want to throw it in here. This year there was absolutely no change to the status quo as far as available states for p2p investors. When I speak with the legal teams at Lending Club and Prosper they insist they are trying to rectify this. I am hoping 2012 will provide some movement on this front.
So that is my list of predictions. I will make sure and check back in 12 months to let you know how I did. I am very interested in hearing the predictions of others. What do you think will happen this year?