While moments ago troubled peer-2-peer lender Lending Club announced that it missed consensus EPS expectations of -0.02, reporting a steeper than expected decline of -$0.09 on an operating loss of $81 million compared to $4.1 million a year ago, the reason why the stock is tumbling after hours is that just months after its CEO departed the company in a scandal that has thretened to potentially engulf such prominent board members as John Mack, the company just announced that its CFO, Carrie Dolan, is also stepping down in what the market sees as a clear warning sign that the company's troubles are nowhere near done despite it having successfully concluded a debt securitization in the past week, which to some suggested that LC has finally managed to move on beyond its troubles.
From the statement:
Lending Club announced that Carrie Dolan resigned from her role as CFO to pursue a new opportunity. In response, Lending Club has appointed Bradley Coleman to Principal Accounting Officer and Interim CFO. Mr. Coleman has served as Lending Club's corporate controller since 2013 and will continue in that role while fulfilling his new duties. The company has retained a global executive search firm to manage the recruitment of a new CFO and expects to name a successor in due course.
"Carrie was integral to Lending Club's maturity and growth over the past six years," said Scott Sanborn, CEO and President of Lending Club. "She approached us early this year about planning a transition, and in May the Board and I asked her to postpone her plans until we could navigate recent events. I and the Board want to thank her for her leadership, commitment and dedication particularly over the last several months, and wish her well in her next endeavor."
"I remain a passionate believer in this business model and this company, and it has been a deeply rewarding experience to help build Lending Club from 40 employees to over 1,500," said Ms. Dolan. "Now that investors are re-engaged with the platform, I am excited to begin my next chapter."
The stock is less than enthused by this latest development.
What is curious is that despite the ongoing troubles facing the company, its origination continues to chug along:
Originations – Loan originations in the second quarter of 2016 were $1.96 billion, compared to $1.91 billion in the same period last year, an increase of 2% year-over-year. The Lending Club platform has now facilitated loans totaling nearly $21 billion since inception.
Which leads to the following A3 outlook:
Operating Revenue in the range of $95 million to $105 million.
Adjusted EBITDA in the range of ($30) million to ($15) million.
At this point, only regulatory or enforcement intervention may halt this particular subprime train.