LendingClub Story

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LC -- USA Stock  

USD 11.56  0.05  0.43%

46% of stocks are less risky than LendingClub on the basis of their historical return distribution, and some 76% of all equities are expected to be superior in generating returns on investments over the next 60 days. While some risk-seeking investors are getting worried about financial services space, it is reasonable to go over LendingClub as a possible investment alternative. We will analyze how risky is to take a position in LendingClub at this time.
Published over two weeks ago
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Should you drop your LendingClub (NYSE:LC) position after the current rise?
The entity reports 391.77 M of total liabilities with total debt to equity ratio (D/E) of 0.53, which is normal for its line of buisiness. The firm has a current ratio of 6.3, indicating that it is in good position to pay out its debt commitments in time. LendingClub holds a performance score of 17 on a scale of zero to a hundred. The company secures a Beta (Market Risk) of 0.3307, which conveys possible diversification benefits within a given portfolio. Let's try to break down what LendingClub's beta means in this case. As returns on the market increase, LendingClub returns are expected to increase less than the market. However, during the bear market, the loss on holding LendingClub will be expected to be smaller as well. Although it is vital to follow LendingClub price patterns, it is good to be conservative about what you can do with the information regarding equity historical price patterns. Our philosophy towards estimating future performance of any stock is to look not only at its past charts but also at the business as a whole, including all fundamental and technical indicators. To evaluate if LendingClub expected return of 1.36 will be sustainable into the future, we have found twenty-one different technical indicators, which can help you to check if the expected returns are sustainable. Use LendingClub value at risk, and the relationship between the jensen alpha and semi variance to analyze future returns on LendingClub.
Volatility is a rate at which the price of LendingClub or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of LendingClub may increase or decrease. In other words, similar to LendingClub's beta indicator, it measures the risk of LendingClub and helps estimate the fluctuations that may happen in a short period of time. So if prices of LendingClub fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility. Please read more on our technical analysis page.

How important is LendingClub's Liquidity

LendingClub financial leverage refers to using borrowed capital as a funding source to finance LendingClub ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. LendingClub financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between LendingClub's total debt and its cash.

How LendingClub utilizes its cash?

To perform a cash flow analysis of LendingClub, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash LendingClub is receiving and how much cash it distributes out in a given period. The LendingClub cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities. LendingClub Net Cash Flow from Operations is projected to decrease significantly based on the last few years of reporting. The past year's Net Cash Flow from Operations was at (243.58 Million)

LendingClub Volatility Drivers

LendingClub unsystematic risk is unique to LendingClub and usually not directly affected by the market or economic environment. An example of unsystematic risk is the possibility of poor earnings or a layoff due to coronavirus. One may mitigate nonsystematic risk by buying different securities in the same industry or by buying in different sectors. For example, if you have a position in LendingClub you can also buy LexinFintech Holdings. You can also mitigate this risk by investing in the credit services sector as well as in companies having nothing to do with it. This type of risk is also called diversifiable risk and can be understood from analyzing LendingClub important indicators over time. Here we run a correlation analysis between relevant fundamental ratios over at least ten year period to find a relationship in the way they react to changes in LendingClub income statement and balance sheet. Here are more details about LendingClub volatility.
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Sale by Scott Sanborn of 9043 shares of LendingClub

Legal trades by LendingClub insiders are very common, as founders, directors, or employees of any publicly traded firm often have stock or stock options. These trades are made public in the United States through the filing of Form 4 of the Securities and Exchange Commission. Below entry was recorded recently and is publicly available as an insider trade:
LendingClub insider trading alert for sale of common stock by Scott Sanborn, CEO, on 15th of January 2021. This event was filed by Lendingclub Corp with SEC on 2021-01-15. Statement of changes in beneficial ownership - SEC Form 4. Scott Sanborn currently serves as chief operating and marketing officer of LendingClub [view details]   
Note, although insider trading is legal, in the United States, Canada, Australia, and Germany, for mandatory reporting purposes, corporate insiders are defined as a company's officers, directors, and any beneficial owners of more than 10% of a class of the company's equity securities.

Breaking down the case for LendingClub

LendingClub generated the yearly revenue of 589.56 M. Annual Net Loss to common stockholders was (160.65 M) with gross profit of 1.01 B.
 2018 2019 2020 2021 (projected)
Accrued Expenses Turnover12.7113.014.9516.08
PPandE Turnover10.9510.0811.5917.86

Over 3 percent rise for LendingClub. What does it mean for investors?

Current value at risk is at -4.65. LendingClub shows above-average downside volatility for the selected time horizon. We advise investors to inspect LendingClub further and ensure that all market timing and asset allocation strategies are consistent with the estimation of LendingClub future alpha.

The Current Takeaway on LendingClub Investment

Whereas some firms under the credit services industry are still a bit expensive, LendingClub may offer a potential longer-term growth to investors. To conclude, as of the 2nd of January 2021, we believe that LendingClub is currently overvalued with below average chance of bankruptcy in the next two years. However, our final 30 days 'Buy-Sell' recommendation on the company is Buy.

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This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Raphi Shpitalnik do not own shares of LendingClub. Please refer to our Terms of Use for any information regarding our disclosure principles.

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