LendingClub (NYSE:LC) stock fell significantly in after-hours trading on January 28, 2025, and then fell 21.8% in pre-market trading on January 29, 2025, after it posted its Q4 2024 earnings report.
This is mainly due to its Q4 earnings missing and weak guidance. However, LendingCLub did manage to outperform some expectations.
LendingClub reported $0.08 in EPS and missed the consensus estimate of $0.09 by 11%. This triggered a reversal from Q3 when the company beat EPS estimates by 83%.
Revenue did manage to beat estimates. The top line grew 17% year-over-year to $217.2 million and surpassed expectations of $206.43 million. Loan originations also rose $13% to $1.85 million. The loan originations were mostly driven by new consumer loan products.
Net interest margin is being compressed too. The net interest margin fell to 5.42% vs. 6.4% in Q4 2024.
Management’s Q1 2025 guidance is quite weak. Loan originations are now forecasted between $1.8 billion to $1.9 billion. At the midpoint, this is basically flat from Q4.
Pre-provision Net Revenue (PPNR) is also projected at $60 million to $70 million, which is down significantly from $74.3 million in Q4 2024.
As for profitability, full-year profits in 2024 rose to $51.3 million and grew 32% year-over-year. However, Q4 net income fell to $9.7 million vs. $10.2 million in Q4 2023. This is due to a one-time $3.2 million impairment charge, but it did pressure margins.
JPMorgan downgraded LC stock to Neutral in December after a 146% rally in 2024. JPMorgan believed LendingClub was fairly priced back then. The current price of $13.25 may change the sentiment going forward.
The current consensus analyst price target on the stock is $20.1. But analysts are likely to follow JPMorgan after the recent report with more realistic price targets.
Despite the recent sell-off, LC stock is still up 45% in the past year. The revenue growth and deposit expansion (up 24% to $9.1 billion) metrics show long-term growth. If LendingClub manages to beat estimates in Q1 2025, it could return to its bullish trajectory. In the meantime, a lot of profit-taking is taking place.