LendingClub Falters After Ex-CEO Forms Competitor, Rival Makes Strategic Buy

Shares of online lender LendingClub (LC) have been under pressure the last two trading sessions after reports earlier in the week that the company's former CEO, Renaud Laplanche, is starting another venture to lend money online. Laplanche was forced out of the company this past May after an internal investigation on certain loan sales. Additionally, a rival in the online lending space, LendingTree (TREE), announced a key acquisition last night after the close of trading.

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WHAT'S NEW: According to a Wall Street Journal report out yesterday, Renaud Laplanche has filed papers in several states to create an online lending marketplace. Laplanche's new San Francisco-based venture is named Credify Finance, and will "make loans via the internet just like LendingClub," the WSJ said, citing sources. Laplanche, who founded LendingClub in 2006 and was ousted from the firm in 2016, is partnering with several ex-LendingClub executives and a former U.S. Treasury official, added the WSJ. Credify is in its early stages of development but is targeting 2017 to begin extending credit to consumers.

RIVAL MAKES ACQUISITION: LendingTree, a rival of LendingClub, announced last night that it acquired Iron Horse Holdings which does business under the name CompareCards for a total consideration of $130M. CompareCards is a leading online source for side-by-side credit card comparison, comprehensive credit education and credit health management. LendingTree sees the CompareCards acquisition as significantly and immediately accretive.

INTELLIGENT DEAL: In a note to investors this morning, Stephens analyst John Campbell said he sees LendingTree's acquisition of the credit card leads aggregator as an "intelligent deal." The analyst believes it should "greatly" improve LendingTree's existing credit card offering, and notes that the company appears to have landed it at a great price. Further, Campbell thinks the deal should provide a "nice positive" margin mix shift, and the non-mortgage revenue growth should help offset some potential mortgage softness with the rising rate environment. He reiterates an Overweight rating and $130 price target on LendingTree shares.

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