The company is based in San Francisco, but it’s in New York that the eyes are on it. LendingClub is a participatory finance company, founded in 2006. After it had successfully completed a Series A financing round of $10.26 billion, in August 2007, the company developed into a full-scale peer-to-peer lending company. LendingClub was the first peer-to-peer lending company to offer loan trading on a secondary market, over a standard period of three years.
Over the past fifteen years, the lender has become a reference in the United States, with a platform that brings together borrowers and investors, thus avoiding the need to become a real credit institution like banks.
However, at the New York Stock Exchanges, things are getting worse and worse. The largest lender to individual Americans is having a hard time weathering the current crisis. In recent months, the fintech company LendingClub was already suffering from increased competition.
LendingClub went public in 2014, at a time when its stock was trading at more than $90 and its capitalization was around $10 billion. Within a year, its share price was hit hard by the arrival of increasingly competitive competition, dropping its share price to less than $25.
Time passed, and LendingClub never regained its original glorious trajectory. The coronavirus pandemic could be a new dark period for the Californian company. In these new circumstances, a contingency plan has just been approved by its management.
If you want to be the first to find out the latest economic news in the world, download the Born2Invest mobile app. Discover the latest happenings in the fintech sector and read the most interesting news from other economic sectors such as Biotech, Crypto, and Crowdfunding with our companion app.
Drastic dismissal at LendingClub
460 employees were laid off from the company, according to a file published by the Securities and Exchange Commission (SEC), equivalent to 30% of LendingClub’s workforce. For the remainder, a 10 – 25% reduction in salaries was also decreed. The members of the management team will also experience a 25% reduction in their pay.
This emergency plan was decided at a time when the health and economic crisis triggered by the COVID-19 pandemic has had a major impact on the credit market. LendingClub expects a “significant drop” in its revenues this year. “While the coronavirus has caused 22 million job losses in the United States, consumers are already struggling to repay their loans online,” Forbes journalist Jeff Kauflin said.
A confident CEO in spite of everything
The shock was measured on the demand side of individuals, but also on the supply side of investors, rethinking the idea of financing loans in such an unstable period. LendingClub shares continue to plunge, trading as low as $6.45, the lowest since its introduction. A situation that does not alert its CEO Scott Sanborn, however, who believes in reducing fixed costs with the redundancy plan.
“It was necessary to realign our workforce with the current business environment. Through these actions, we believe we are well positioned to achieve our long-term strategic goals and better serve our members,” he said, regretting, however, the 460 displaced employees: “It’s never easy to lose people who are not just colleagues, but teammates and friends.”
DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.
This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.
First published in PRESSE CITRON, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.
Why Morocco Should Go Further with Cannabis Decriminalization
In a long-term vision, the CSMD also recommends a form of decriminalization the recreational use of cannabis, moving from prison...
10 Important Reasons to Update Your Business Website
Many business owners don’t realize the importance of updating their websites. Take your stale, tired, and clunky website to an...
Three Applications Putting Augmented Reality in the Hands of Real Users
Augmented Reality (AR) is an exciting technology, especially now that we’re reaching an age where viable smartglasses are finally coming...
The State of Social Security: A Breakdown of the 2021 OASDI Trustees Report
The difficulties surrounding Social Security have not changed. It’s simply an equation of inflows and outflows. The glaring reality is that in...
Why the Number of Hedge Funds Active on the Crypto Market is Increasing
According to Francesco Filia, CEO of Fasanara Capital, cryptocurrencies often boost the performance potential of traditional hedge funds due to...
Business2 weeks ago
Five Things Small Entrepreneurs Need to Know to Develop a Great Shopping App
Cannabis2 weeks ago
Clever Leaves Exports Cannabis from Colombia
Featured2 weeks ago
How Climate Change is Affecting Stock Markets and the Global Economy
Crypto2 weeks ago
Binance on the Warning List for Investors in Singapore