With the business potentially at an important milestone, we thought we'd take a closer look at LendingClub Corporation's (NYSE:LC) future prospects. LendingClub Corporation, operates as a bank holding company for LendingClub Bank, National Association that provides range of financial products and services through a technology-driven platform in the United States. With the latest financial year loss of US$188m and a trailing-twelve-month loss of US$99m, the US$2.8b market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which LendingClub will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
According to the 5 industry analysts covering LendingClub, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$121m in 2022. Therefore, the company is expected to breakeven just over a year from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 52%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving LendingClub's growth isn’t the focus of this broad overview, but, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one issue worth mentioning. LendingClub currently has a debt-to-equity ratio of 103%. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
There are key fundamentals of LendingClub which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at LendingClub, take a look at LendingClub's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further examine:
- Historical Track Record: What has LendingClub's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on LendingClub's board and the CEO’s background.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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