- 1Share
By now you’ve probably heard that Lending Club has filed to go public. Lending Club will now be in a “quiet period” until after the IPO actually occurs. If you’re interested in digging in yourself, you can view the SEC related documents here:
http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001409970&owner=include&count=40
There has been some talk regarding whether the IPO will be available for retail investors. For an industry that started with mostly retail investors, I hope Lending Club does their best to make this possible. After all, we are talking about something that once represented true “Peer to Peer Lending” I’m hopeful and signed up to be notified of new IPOs through Loyal3. If you haven’t heard of Loyal3, it is an easy way for retail investors to purchase stocks of well known U.S. companies. Most recently, they have allowed retail investors access to the GoPro IPO.
This is solely just speculation on my part, but if you want to get notified of upcoming IPOs offered through Loyal3 - you can do so through my below (affiliate) link:
Loyal 3 - Get notified of new IPOs
What will the IPO mean for Investors and Borrowers?
It has been discussed that Lending Club’s main goal with the IPO is to bring awareness to peer to peer lending. Perhaps many friends and family of mine who have not heard of peer to peer lending will finally be aware and understand what p2p lending is all about.
As a result of the IPO, investors from all states will be able to invest in the platform in what is known as the blue sky exemption. This will likely lead to an eventual influx of new investors from these states as well as the increased visibility to potential borrowers. I’ll be curious how this affects loan availability, but if I had to make a prediction - I would guess that demand from investors will continue to outweigh loans available for investing. For investors who have been on the fence of investing in p2p lending, I hope this will help legitimize p2p lending as an investment.
Buying new notes from Lending Club currently is only available in 26 states, but the secondary market (FOLIOfn) is available in several more. Lending Club has much more availability for borrowers as it is currently available in all but 5 states. Since borrowers have already been well served and being that the secondary market has quite the learning curve, this would also lead me to believe that loan availability could decrease. You can view the updated maps here:
http://blog.lendingclub.com/is-lending-club-available-in-my-state/
Will you be investing?
I’ve been reading lots of articles which estimate that the valuation of Lending Club could be around $5 billion. Since I believe in this industry, I have been contemplating whether or not I will be purchasing shares. Although my general investing philosophy with stocks is to keep it simple and stick with index funds. It will certainly be interesting to see long term whether investors would have been better off investing in stock or simply investing in notes on the platform.
Regardless of whether I buy Lending Club stock, this is an exciting time for the p2p lending industry - it is certainly here to stay.
I’d love to hear thoughts from readers. Are you planning on buying shares? Would you participate in the IPO if it was an option? I’d especially appreciate anyones thoughts who has more insight into valuations/stock picking.
- 1Share
- 1Share
This blue sky exemption is exciting news. As for buying shares, I’m on the fence as well. I’m more of an index guy like you. Getting an individual stick basically contradicts what I’ve been telling my friends for 10 years. However, I also feel Lending Club is undervalued by most people, so the stock has incredible potential…
From a 1 to 10, how likely are you to get in on the IPO? I’m at a 6.
I’d say a 5 - I am really undecided and if I do decide to invest, it will probably be < 1% of my total investments. I've actually done pretty well with stocks before I found index funds, but I think it was more due to luck than my ability to pick winners. The only stock I own is Apple and I plan to close that position in the near future.
Index funds are the main way I invest in stock market too, but I do make some individual stock purchases when I really believe in the market and its growth potential. Something like 3D printing in the past.
Unless the price jumps a lot on the first day of trading, I will probably put a couple thousand dollars into Lending Club. But not much more. I would rather invest more money WITH Lending Club than IN Lending Club.
You bring up a good point regarding investing WITH rather than IN. I think it would be fun to track over time whether it is been more lucrative to invest in notes vs in their stock. If I do buy stock, this will surely be part of my quarterly updates.