Down 35% This Year, This Fintech Stock Is a Buy
The digital marketplace bank LendingClub (NYSE: LC) got off to a good start to the year, generating earnings results for the first quarter of 2022 that easily beat analyst estimates. LendingClub generated $0.39 diluted earnings per share on revenue of close to $290 million. The stock has been hit hard this year and even after a nice post-earnings run is still down about 35% this year, as tech stocks have been hit hard and as the market grows increasingly concerned about consumers and how they might perform as economic conditions get more difficult. But after its first-quarter earnings results, I think LendingClub is a buy. Here's why.
Investors are worried that consumers, who have been propped up by stimulus, excess savings during the pandemic, an ultra-low interest rate environment, and a strong stock market, will struggle as the Federal Reserve raises its benchmark overnight lending rate -- the federal funds rate -- several times this year and eventually begins to reduce its $9 trillion balance sheet. The markets have struggled since last November while adapting to the Fed's new policy outlook. Consumer-facing fintech companies like LendingClub, which are largely in the business of originating unsecuritized personal loans, have been hit extremely hard because as debt piles up, consumers tend to stop repaying this debt sooner. Heavy loan losses would not be good for the stock. So far, though, credit quality is still in extremely good shape.
Image source: LendingClub.
Source Fool.com
