Market Overview

How To Play Lending Club And On Deck Before Lock-Up Expirations

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LendingClub Corp (NYSE: LC) and On Deck Capital Inc (NYSE: ONDK) are approaching sizable IPO lockup expirations this June. In light of these events, Compass Point analysts Michael Tarkan and Andrew Eskelsen took a look at IPO performance (2012-2014 period) as the companies go into and out of their respective lockup expirations.

Key Takeaways

"2012-2014 IPOs were weak heading into lockups," underperforming the Russell 3000 Index for three consecutive months heading into their respective lockup expirations.

After lockup expiration, stocks remained muted for several months.

"IPOs with a large amount of float opened up at lockup expiration underperformed by a wider margin than IPOs with less float unlocked."

The float unlock for both companies will more than quadruple at expiration, two months from now. For LendingClub, 303 million shares will become unlocked on June 9, versus the current float of 68 million. For On Deck, 56 million shares come unlocked on June 15, compared to the current float of 13 million. Analysts at Compass Point "expect both stocks may experience some degree of technical pressure in anticipation of potential selling from earlier-stage investors."


The firm has set a price target of $16 for LendingClub and $14 for On Deck.

Latest Ratings for LC

Oct 2016WedbushInitiates Coverage OnUnderperform
Oct 2016WedbushInitiates Coverage OnUnderperform
Aug 2016Credit SuisseMaintainsNeutral

View More Analyst Ratings for LC
View the Latest Analyst Ratings

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