Poor On Deck Guidance Is Concerning P2P Investors: But Does It Matter?

Shares of On Deck Capital Inc ONDK are collapsing Tuesday following a big Q1 earnings and Q2 guidance miss. On Deck reported Q1 EPS of -$0.18 on revenue of $62.6 million versus consensus expectations of -$0.07 EPS on $69.3 million in revenue. Looking ahead, the company guided for $67-70 million in revenue in Q2, well short of the $78 million analysts were expecting.

On Deck’s big whiff has the stock trading down more than 35 percent on Tuesday, and rival online lenders LendingClub Corp LC and Lendingtree Inc TREE are also down about 10 percent each following On Deck’s surprisingly weak report.

FBR’s Bob Ramsey views On Deck’s Q1 as cause for a downgrade of the stock from Outperform to Market Perform.

“We like ONDK’s business model, particularly its ability to partner with banks to provide lending as a service, but the near-term volatility in earnings and lack of profitability are concerns,” Ramsey explained.

Related Link: On Deck's Problem Isn't Credit

Q1 marked the first time in the past four quarters that On Deck has missed Wall Street earnings expectations. While LendingTree and Lending Club have also beaten consensus earnings estimates in each of the last three quarters, LendingTree has been the big winner on the market in the past year.

Over the last 12 months, LendingTree is up 49.76 percent, while Lending Club and On Deck are down 59.82 percent and 72.16 percent, respectively.

Disclosure: The author holds no position in the stocks mentioned.