The Lending Club IPO: A First Hand Account at the NYSE

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Lending Club banners outside the New York Stock Exchange on IPO day

When I first started writing about this industry in 2010 I did it because I loved the concept and believed in its potential. Back then I was pretty much alone in that thinking.

But earlier today many thousands of investors around this country decided that they also believed in this industry’s potential as they bought equity in Lending Club in the first IPO this industry has ever seen.  It was an historic and groundbreaking day.

When Lending Club sent me an email early last week inviting me to their IPO celebration today on the floor of the New York Stock Exchange I didn’t hesitate. I wanted to be there and was honored that they included me.

So, this morning I arrived at the NYSE at 8am. There were dozens of people milling about outside admiring the huge Lending Club banner including a who’s who of the P2P lending industry. All the invited guests, numbering probably 100 or so, then headed inside where we were all presented with a bright red Lending Club jacket.

At the New York Stock Exchange breakfast with Lending Club CEO Renaud Laplanche
At the New York Stock Exchange breakfast with Lending Club CEO Renaud Laplanche

Then it was upstairs for a sit-down breakfast where we heard speeches from Renaud as well as Lending Club board members John Mack (the former CEO of Morgan Stanley) and Jeff Crowe of Norwest Venture Partners (they invested in Lending Club’s Series A back in 2007). We also heard some brief remarks from Larry Summers (the former Treasury Secretary) who patched in remotely.

After breakfast we all went down to the NYSE trading floor to await the opening bell. There were people with red jackets everywhere. And that doesn’t include the dozens of Lending Club employees who made the trip and were looking down from the balcony.

Ringing the Opening Bell

The Lending Club executive team ring the opening bell of the New York Stock Exchange
The Lending Club executive team ring the opening bell of the New York Stock Exchange

Just before 9:30am EST Renaud and the Lending Club team went up to ring the opening bell of the New York Stock Exchange. This was a big moment and received a huge roar from the crowd.

Then we waited. We were told that trading would open around 10am. While Lending Club (ticker: LC) didn’t open at 10am that was when we got our first indication of where it would begin trading. The first indication was an open in the $17 – $20 range but that was quickly replaced by an indication of $20-$22, then $22 – $24 and finally $23 – $25. Keep in mind that the underwriters set the IPO price on Wednesday night of $15/share.  This was quite a bump in price.

This being my first time on the floor of the New York Stock Exchange for an IPO I was fascinated to see how much human involvement there was in this process. The trader at the “Lending Club post” would yell out the latest price indication and the number of shares for sale every couple of minutes and the traders around us would be on their phones talking with clients and making notations on their tablets.

Finally, Lending Club began trading as Renaud rang the small bell at the trading post. The first trade at 10:40am EST was at $24.75 and the stock quickly popped higher to over $25 before settling in to a range of between $23 and $24 where it stayed all day.

With Lending Club COO Scott Sanborn after Lending Club opened for trading
With Lending Club COO Scott Sanborn after Lending Club opened for trading

The Retail Investor Share Purchase Program

Around 20 minutes later we were all ushered off the trading floor, where many of us left somewhat reluctantly. It was a stunning morning and I, for one, was not ready to leave. It was an incredible experience witnessing an IPO first hand, the first one I have ever had a vested interest in.

Speaking of a vested interest, I participated in Lending Club’s Directed Share Program through Fidelity that was available for Lending Club retail investors. I had requested the maximum of 350 shares but, like most people, only received 250 shares. I intend to hold these shares for a very long time. I would like to commend Lending Club for their inclusion of their retail investors in this program – for many of us it was the first time we had ever been able to participate in an IPO.

When the NYSE closing bell rang this afternoon Lending Club’s shares were priced at $23.43. This was up $8.43 or 56% on the IPO price. Lending Club had raised around $870 million and the company was valued at $8.46 billion. According to Bloomberg this puts Lending Club’s market cap higher than all but 13 U.S. banks.

The Lend Academy Contest

Back in June when it became apparent that Lending Club was likely to have their IPO sometime in 2014 I decided to run a fun little contest. I asked Lend Academy readers to guess what valuation that Lending Club would be priced at and what day the IPO would happen.

We have our winners. Long time Lend Academy reader, Randawl, guessed the IPO would happen on December 10 – he was off by only one day. Congratulations! Not bad for a guess made back in June. On the valuation front, Lending Club was priced at $5.4 billion and while no one guessed that number, we had two people guess $5.5 billion. So, congratulations to Raymond and Tim who are both winners. You will all be contacted via email in the coming days to receive your prizes – which is Lending Club branded gear.

Final Thoughts on the IPO

There will never be another day like today. Lending Club has broken new ground today and gained the attention of the financial world with a very successful IPO. No one knows what lies ahead, particularly what the stock price will do from here. But today the P2P lending industry, or as I should say now, the marketplace lending industry, grew up.

As Larry Summers said in his remarks this morning today marks the end of the beginning. Now, we will see the true potential that Lending Club has to change the world. With almost $1 billion in their coffers now that potential is vast.

To see more photos of the day check out Luc Hardy’s Flickr page. Luc was an investor in the Lending Club seed round back in 2006. You can also watch Renaud’s CNBC interview here.

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SarahV
SarahV
Dec. 11, 2014 8:37 pm

It was a good day for me, too, even though Fidelity tried their darnedest to spoil it – first by failing to ever send me the necessary e-mail (I got the info I needed from the forum, within minutes of the deadline to indicate interest). And then today when I hit the sell button at $25 their app spit out an error… and then back in my office the website spit out the same error… I called them and watched the price falling as they put me on hold… finally sold at $22.50, which was almost the very bottom for the day because that’s just the sort of person I am (I always joke that someone should have a mutual fund based around the idea of buying whatever stock I just sold since it’s bound to shoot up afterwards!). So, I should have walked with a $2500 profit but I am still pretty darn happy with $1875.

I’m long on LC myself but I want it to be in my Roth IRA, so I took the short-term profit from the IPO and will likely buy back in sometime in 2015 in the IRA.

Limit order
Limit order
Dec. 12, 2014 7:40 pm
Reply to  Peter Renton

LIMIT. ORDER. WHYYYY

Michele agostini
Michele agostini
Dec. 11, 2014 9:32 pm

It’s brilliant Pete. Congratulations.

Ryan
Ryan
Dec. 12, 2014 3:04 am

Should have just put in a stop loss at $22 rather than selling, unless your happen to be desperate for the money right now. I locked in my gains by putting in the stop loss, but I still have my shares for the likely possibility that this goes to $30 in the coming weeks. Keeping a trailing (which never decreases) stop loss $3 or $4 behind the share price is prudent.

SarahV
Dec. 12, 2014 12:42 pm
Reply to  Ryan

I was going to do that, but Fidelity spit out more error messages when I tried… at some point I just wanted out of that company. I can buy LC in my Vanguard account at a price similar to where I sold.

Very cool
Very cool
Dec. 12, 2014 5:00 am

exciting stuff all around!

RawRaw
RawRaw
Dec. 12, 2014 7:56 am

I’m surprised you’ve never been in an IPO Peter. Based on your LC accounts, you have the financial suitability lol

Sully
Sully
Dec. 12, 2014 9:34 am

Up nicely on a down day so far this morning. A stop loss is tempting when faced with big gains but I’m in this for the long term. And I dislike short term capital gains.

Mr. 1500
Dec. 12, 2014 9:42 am

Yes, big thanks to LC for letting us little guys and girls get in on the fun. My wife and I picked up 500 shares.

Let’s meet back here in 10 years and reassess.

Cheers!

Jacob
Dec. 12, 2014 12:40 pm

This was so much fun to watch from afar. Thank you Peter for your ongoing, in-depth analysis of this industry. Although I don’t post a lot here, your website is one of the few places I visit on a near daily basis. Keep up the good work!

Robert Magill
Dec. 12, 2014 3:12 pm

All in all it went swimmingly except for Fidelity. What a struggle I had with them! Perhaps this was something new and the learning curve was too great. Anybody know?

JJ Hendricks
Dec. 12, 2014 4:09 pm

Looks like a great experience. It would be fun to see all the PR ground game going into an IPO at NYSE. And see all the trading on the floor. Too bad it isn’t open to the public anymore. I know it isn’t exactly the same, but I always loved that scene in “Trading Places” with the trading floor.

Congrats.

HG
HG
Dec. 12, 2014 5:11 pm

They finally did it! Thank you for keeping us posted Peter!

flyp52
flyp52
Dec. 12, 2014 7:53 pm

Peter – Congratulations and a big thank you for all you have done for the community. You had a hand in getting Lending Club to where it is today and it was great to see you recognized for your contribution – what a priceless experience!

Sully
Sully
Dec. 13, 2014 9:44 am

Interesting week. Stocks down close to 4%, oil crashing, gold down a bit, bonds up (fortunately…ridiculously low yields now). As usual, my regular Lending Club accounts cushion the blow. Not to mention the nice gain in the DSP. Other than perhaps a stock option here or there, don’t think I’ve ever had a 64% gain in 2 days!

JayP
JayP
Dec. 14, 2014 7:31 pm
Reply to  Sully

Hi, if I still remember this correctly, you are the only one among all DSP recipients on forum who posted some details of their offer with maximum shares offered. 4000! Hope you received 100% of allocated shares in your account.

Laurie
Laurie
Dec. 14, 2014 2:43 am

I feel fortunate to have stumbled into all this about a year and a half ago. Thanks everyone, thanks Lending Club, thanks Peter, thank God for giving me a brain!

Joseph
Joseph
Dec. 14, 2014 7:23 am

Hi, I also got 250 IPO LC shares through the Directed Share Program. But, can someone please post detailed instruction on how to pay for the shares. The fidelity IPO website does not give any instruction, and it’s really hard for me to call fidelity since I am overseas. Thanks!

Sully
Sully
Dec. 14, 2014 9:39 am

Joseph, the money must be in your Fidelity account by the settlement date of Tuesday Dec. 16 or you will lose your shares. At this point your best bet is a bank wire or check sent overnight immediately.

Joseph
Joseph
Dec. 14, 2014 6:14 pm

Hi Sully, thank you so much! I transferred money from my other Fidelity investment account to the Fidelity account holding the IPO shares already. Thanks!

Sully
Sully
Dec. 15, 2014 9:38 am

Hmm..LC stock price getting a getting a little exuberant here!

HG
HG
Dec. 15, 2014 2:34 pm

I am not sure if it’s just me but it seems like Google Finance has ticker LC listed as Liberty Corporation: https://www.google.com/finance?q=LC&ei=i0SPVPm9CIGKiAKWt4HIBA

Am I missing something here?

Sully
Sully
Dec. 16, 2014 10:58 am

It’s fun to watch analysts try to figure out a valuation for Lending Club. EPS? …no way. Revenue? …hard to justify. The most interesting I’ve seen is a % of total loan originations…at like 80%-90% of total loan originations. Seems spot on to me…at the moment. One analyst this morning raised the price target to $31. Fun to watch and so damn vindicating for one who has been praising this concept for over 5 years. “You’re loaning money on an unsecured loan to total strangers?? Are you nuts?” Can’t wait for options to start trading. Hmm…sell out of the money covered calls and capture the time premium and add a couple of percent to my LC return? Possible. With a Vanguard brokerage account option trade commissions are negligible. I do plan to run away from Fidelity as soon as I can! They did not handle the DSP well.