LendingClub Corp (NYSE:LC) has seen better days; the company’s stock is sinking thanks to gloomy forecast for 2018 and beyond, and investors everywhere are starting to wonder if it’s time to abandon the company before it’s too late. As the company struggles to come into its own in the 21st century, and feels the heat of an increasingly competitive market, its current viable status may soon be jeopardized.
Dim forecast
LendingClub’s (NASDAQ: LC) most recent dilemma began with a rather gloomy forecast for market conditions in 2018; the company raised its loss estimate, and expects dim revenue figures as competitors continue to leech away its customers. Shares of the company plunged some 22 percent, with investors in LendingClub walking away as one of the biggest losers on Thursday. In order to win back the confidence of its shareholders, LendingClub needs to act quickly to usher in change.
First and foremost, the company needs to win back the respect and trust of its workers and customers alike. After a government investigation found that the company had falsified documentation in a deal, its CEO resigned, sinking its share prices then and creating a stigma around the company that will be hard to lose. While LendingClub’s grim future in the market isn’t necessarily sealed, and the company still has some options on the table, climbing back out of a such a deep hole it’s dug for itself won’t be easy, nor quick.
Investors still confident in LendingClub are thus wisely advised to buckle up for stormy weather; the company’s troubles aren’t going anywhere, and it’s unlikely its reputation will be salvaged amongst investors for years. Wiser investors should already know to be cautious around the company; its relatively low revenue figures and poor financial reports for the past few years have long since given it an aura of trouble.
For instance, LendingClub said that, while it originally expected some $158 to $163 million in revenue in the fourth quarter, it’s now expecting only $155 million to $160 million. While LendingClub is unique in that it’s drawn comparisons to the likes of market behemoths like Amazon (NASDAQ:AMZN), who continues to cause headaches for virtually all competitors across a myriad of industries, it lacks real clout in the marketplace, and its current market woes are only going to grow. Today’s consumer preferences are only likely to change more and more in the digital era, and LendingClub has already shown it’s struggling to keep up.
Climbing back to the top
Regaining its confidence, not to mention its recently loss share value, won’t be easy for LendingClub. The online lender has already been tarnished in the public eye, something few companies manage to struggle back from, and with net losses expected to range from $6 million to $10 million, more investors are likely to jump ship soon.
LendingClub’s immediate challenge, then, will be keeping ahold of what little market value it has left. It needs to reaffirm its shareholder’s faith, and establish some form of revenue capable of keeping it afloat long enough to make enough changes to its mortgage broker that it remains viable well into the future.
There’s serious investor interest in companies like LendingClub, and for good reason. With companies like Square Inc (NYSE:SQ)., headed by Twitter CEO Jack Dorsey, entering the market, LendingClub could argue correctly that its industry is on the rise, and it’s only undergoing a short period of stormy weather. LendingClub needs to move fast if it’s to prove it has any chance at reaching success one day; investors are already shaken to their core when it comes to the company, and increased losses next quarter could be the final straw.
In an innovative market economy that’s as digital as ours, lending will always be in demand. With a proper reformation of its business operations, LendingClub could stand to remain viable well into the future. The truth, however, is that it’s far more likely the company continues to stumble down the pathway towards total market failure. LendingClub’s fate is only likely to grow grimmer, and savvy investors should know that their money is in endangered hands if they try to hop onboard of a sinking ship.