This is an exciting time for anyone who follows this industry. It is officially IPO week for Lending Club and it looks like Thursday is going to be the big day.
For retail investors participating in the IPO through the Directed Share Program you should have received an email from Fidelity today. This letter was basically a duplicate of one that was sent out last week, the big difference being that the price range has increased from $10 – $12 a share up to $12 – $14 a share. This morning Lending Club filed the fourth version of their S-1 that reflected this change.
It looks like participants in Fidelity’s Directed Share Program will have a six hour window from 6pm until Midnight Eastern Time on Wednesday evening to confirm their expression of interest. From what I have heard these small windows are pretty typical with IPOs – I have heard some Loyal3 IPOs use a window of just one hour.
I reached out to a number of industry leaders today to get their thoughts on this historic event. Given that Lending Club is the first company to go public in our industry we will never again have an IPO like this one. So I wanted to get a range of perspectives on the record.
Here is what Aaron Vermut, CEO of Prosper has to say:
This is the first online marketplace for credit to go public and an important validation and branding of our industry. This IPO is going to bring a new level of education, awareness and understanding of alternative lending, and that’s really exciting for all involved.
Sam Hodges, Co-Founder of Funding Circle:
Very few companies today can claim to be disruptive in the strict sense of the word; just because you’re doing something new or better, doesn’t mean you’re disruptive. But Lending Club’s IPO is further validation that marketplace lenders are truly a disruptive force within the banking sector. Banks that don’t embrace the P2P lending revolution will, without a doubt, get left behind.
Mike Cagney, CEO and Co-Founder of SoFi:
The IPO is going extremely well – as seen in the increase in size and price range. This isn’t surprising, given how well Lending Club has executed to date and how large the market really is. I think the investment community is starting to realize the next area of hyper growth is going to come from marketplace lenders.
Jon Barlow, CEO of Eaglewood Capital:
It’s a landmark event for the industry because it legitimizes the business model. If they prove that they can go public we will see a flood of capital pour into the sector.
Dave Girouard, CEO and Co-Founder, Upstart:
For years, venture capitalists have been obsessed with enterprise SAS businesses. Lending Club’s IPO is a wake-up call that the opportunity in financial services may be ten times as large. Lending Club will do for this industry what Salesforce did for enterprise SaS.
There has been so much interest in the Lending Club IPO with hundreds of articles written about it recently. I have spoken more with the press in the past month than I have in my previous four years covering this industry. People are finally taking notice of the potential of marketplace lending.
According to CNBC Lending Club will easily be the largest IPO this week and will likely be the biggest tech offering of the year. I will be watching events unfold closely all week. If you want the latest updates then follow the Lend Academy Twitter feed. I will be updating this throughout the week and will likely publish a full post-mortem on Lend Academy on Friday assuming everything runs on schedule.
- 23Shares
I’m not sure any of us potential investors (or anyone at Lending Club) can be entirely comfortable with your use of the term post-mortem at this time. 🙂
Well, I certainly didn’t mean the literal Latin translation because I believe Lending Club will be very much alive come Friday.
Another moderately bad day today for the stock market. If this continues through Wednesday, any thoughts about a potential delay for the IPO ? And I think “post partum” would have been better.
I don’t think there will be a postponement now unless something very dramatic happens. There has been a lot of planning (and expense) that has gone into Thursday’s IPO and I think Lending Club will be reluctant to postpone unless they have to.
Peter, this has to be a special moment for you after all you have done to promote this business model. Congratulations!
Thanks Sully. Yes, this is very exciting for me. It has been great to have a front row seat to the growth of this industry over the past 4+ years.
I’ll add my congrats too, Peter. You & I may have our disagreements & I know I’ve given you a hard time, from time to time. But I certainly don’t need to agree with you or like your chosen role here to also recognize the amount of time & work you’ve put in these last 5 years in carving out that chosen role for yourself in this industry.
No non-employee has done more to promote the retail side of this business than you & though I may deny ever saying this if it ever comes up over in the Forum, I would have no problem whatsoever if LC pulled you aside & quietly slipped you a few thousand shares gratis as a token of their appreciation.
Thanks so much Dan. I think that is the nicest comment I have ever received from you. I appreciate you putting aside our differences to write something like that.
And while I would love to get a few thousand shares of LC stock I don’t think that is happening.
Peter, always the optimist! I don’t think there is much competition for the “nicest comment” Peter ha ha
Thanks Peter. Your sight is more informational than anything I’ve received from Fidelity thus far, so I owe it to you for being able to keep with these small windows and fast pace.
Peter,
Wow….what a moment for you. I don’t know if I am more surprised that the LC IPO is almost here or that you received a glowing comment from Dan B. 🙂
Kudos and Merry Christmas!
My bet, for whatever it’s worth (which is very little) is that LC goes out at 14 and pops to 17.5+ before it settles down a bit. Guess we find out where we are starting in just a few hours. It’s just so difficult to tell. There are no comparables. This is a bit historic.
So $15/share gives a $5.4 billion valuation apparently. I wish they stuck with $12. With the way the market is acting sell first ask questions later this is a bold move.
OK, it is 6;17 PM East Coast time and I cannot confirm my Indication of Interest to buy designated shares. Is there a problem anyone knows about?
Same deal. I cannot confirm interest. It appears it was oversubscribed and very few people actually got offers to buy the shares.
It’s official. $15 a share. Fidelity sent an e-mail at 6:34 pm but 30 minutes later the site is still not accepting confirmation. I’m sure it won’t be long. $15 a share causes a bit of a “gulp”, but I’m in. Maybe LC will perk up this gloomy market on Thursday.
I just confirmed. I didn’t receive the email, but it went through.
Just received the email to confirm my intent to purchase. Check your email if you expressed interest.
Now we wait until about 9:00 am to see how much our allocation has been reduced.
Also confirmed.
I dont like that its now gone to $15 a share…. thats a SUBSTANTIAL increase from the low end of $10 just a week or two ago (I’ll let you guys do the % math 🙂 )
Thanks for chiming in everyone. I have also confirmed. It looks like Fidelity had some problems earlier.
It is going to be a very interesting morning tomorrow. Any guesses on the opening price? I will go with $17.50.
its gona close above 20, easy.
I am thinking $18 and it will likely stay there plus or minus $1 the whole day. The only problem is the current market instability
New issues tend to get a pass on general rises/declines. At least from my anecdotes.
My initial prediction was a $14.00 IPO and $17.50 open. Guess I’ll have to go with $18.75 now !
I clicked on share allocation and it says available at 9 a.m. Eastern. Well it is 10 a.m. Eastern and nothing yet.
Same here Richard, although there are posts on the forum indicating that folks rec’d 250 shares out of a 350 share allotment.
See how LendingClub’s VC backers and major shareholders will make out in the IPO (Spoiler Alert: Really Well!): https://equityzen.com/blog/lending-club-path-to-ipo/
First trade soon. Incredible demand. Indications are for an open in the 23-25 range! All I can say is WOW! Personally, this has been so gratifying watching CNBC this morning. Looking back 5+ years when I first committed to LC in a big way, everybody I talked to was very skeptical. Even my wife raised an eyebrow, but she let me play. It’s been fun!
Sully, What a day. And we closed at $23.43 up $8.43 or 56%. It was fantastic being at the NYSE today. Full report coming on Lend Academy soon.
I was allocated 250 shares. I sold all at 23.50. I will probably look at it again once it settles down. A little more than $2K profit 🙂 Congrats to all those who ago it at the IPO price.
Pat, how were you able to sell? My cash to LC shares transaction is still pending. I was fully funded, the cash is already showing as gone, but LC shares show no value and I cannot place a trade order.
Valery,
I was also already funded. The LC shares should have shown cash value once it started trading which was around 10:40ish ET. My order was filled around 11:04 am. You may also be able to just call them and place the trade.
Given the $8Bn valuation (58x trailing revs!) , does anyone want to take a stab at backing into an estimated valuation for other companies in the space that have IPO plans – OnDeck, SoFi, Prosper?
We will find out about OnDeck very soon as they are supposed to start trading on Tuesday. I know the Prosper guys are very happy with the way things went today. I know their valuation has gone up considerably in the past $24 hours.
If you look at originations Lending Club has done probably around $8.5 billion right now and they ended the day with a market cap of $8.46 billion. Prosper has done around $2.2 billion in originations….
Well this was a pretty good stab, Peter, given where the mkt cap of OnDeck ended up today ( ~1.8BN)
Multiples of originations might not hold up given the differences in business models and that it is backwards looking.Some make a spread and earn recurring fees on outstanding loans while others charge one time origination fees. Some take no balance sheet, while others retain risk. I sense eventually the standard multiples of EV/EBITDA, P/S, P/E will have to take hold. Curious to see when this conversion occurs
Yes. The total origination number doesn’t really make any sense from a valuation perspective long term but it clearly is how some people think about these companies today. I suspect this metric will continue to hold for some time probably until this exponential growth starts to slow.