Market Insider

LendingClub shares rise amid report that ousted CEO is mulling a takeover


LendingClub shares rose 6 percent in Wednesday's premarket after the company announced tighter lending practices and word surfaced that ousted CEO Renaud Laplanche may be planning a takeover.

Reuters, citing people familiar with the matter, reported Tuesday that Laplanche has been in talks with private equity firms and banks about a potential buyout of the peer-to-peer lending company.

Laplanche was ousted last month after an internal investigation revealed staff knowingly sold $22 million in loans in March and April that did not meet the buyer's requirements.

The company said Tuesday it was cutting back on riskier loans and raising interest rates in an effort to make the company more attractive to investors. LendingClub expects loan volume to decrease by about 5 percent because of the new policy.

Lending Club executives celebrate with company executives during the company’s IPO at the New York Stock Exchange, Dec. 11, 2014.
Brendan McDermid | Reuters

Investors also digested a note released by KBW analysts late Tuesday that gave a bullish outlook on the stock, despite its recent troubles.

"There is risk to the legal and regulatory environment, and the near term is uncertain as the company assesses the damage on the funding side of the equation. While it could take time, we believe the business model will prove resilient as the company solidifies its funding base," they said in a note to clients.

The analysts also raised their full-year earnings estimates for 2016, 2017 and 2018 and raised their price target on the stock to $5 from $2. In the premarket Wednesday, LendingClub shares traded at $4.68.

The stock ended the day slightly higher. Entering Wednesday's session, LendingClub was down 60 percent for the year.

LC in 2016

Source: FactSet