LendingClub (LC), mcap=$1.2bn, price $11.36 vs $14.33

$LC pitch:
– LendingClub – structurally transformed business after the acquisition of Radius Bank in Feb’21.
– Cheap at 6.5x 2023 earnings and 1.3x TBV.
– The bank enables LendingClubC to retain higher-yielding loans and fund them with stable, low-cost deposits as well as reduces reliance on third-party funding.
– Previously LC generated revenues from transaction fees only.
– With the bank’s CET1 ratio of almost 19% (higher than almost any other bank) the company could potentially initiate a share buyback plan in the next 6 to 9 months.
– ROTCE in low to mid 20’s.
– LendingClub is primarily used to consolidate or refinance credit card debt and save money through lower interest rates and fees.
– Significant run-way to take market share in the $1 Tr credit card market.

$LC valuation:
– Trades at 6.5x 2023 earnings and 1.3x TBV.
– Generates ROTCE of 20%+ and grows at 25+%.
– At 15x PE or 2.5x TBV would be $33 stock.

Exp. gain: +130% to $33/share over the next 6-12 months.

Full LC write-up (free guest account required):

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