LendingClub Upside Likely According To Investor Survey

An AlphaWise survey of retail investor sentiment indicates demand strength to buy loans from the LendingClub Corp LC platform. Morgan Stanley’s James E Faucette commented that while loan appetite could be tempered in the near term, a rebound in retail funding appears imminent, if actual behavior matches the survey results.

Analyst James Faucette maintained an Equal-weight rating for LendingClub, saying that some affirmation of institutional investors also planning to return to the platform was needed to become more constructive on the shares.

Investors To Continue Investing

Faucette mentioned that 70 percent of the AlphaWise survey respondents cited the intention to increase investments, while 12 percent planned to maintain and 18 percent expect to discontinue their investments.

Near-Term Appetite Tempered

Merely 55 percent investors said they planned to continue investing immediately, while 23 percent expect to stop investing on a temporary basis and another 22 percent expect to stop investing permanently.

“We think this is reasonably consistent with reported SEC filing data, which shows a 36% sequential decrease in average weekly volumes over the past 5 weeks vs. the 5 weeks prior to the internal investigation,” the analyst wrote.

Overall Take

The latest filing data shows an uptick to $23.2mn in loans sold, from the $20.7mn average over the prior three weeks. This, along with the survey data suggesting 23 percent of investors had only temporarily suspended their investments until things normalized, “underscores that upside on retail volumes vs. our estimates is a likely outcome,” Faucette said.