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Marketplace Lenders Stock and Volatility vs Regional Banks ETF

Lending Times Daily News analysis and data for p2p and marketplace lending

The market has not been kind to marketplace lending stocks in the last year.  Reviewing the two most prominent publicly traded marketplace lenders: Lending Club (Ticker Symbol: LC) and OnDeck Capital (Ticker Symbol: ONDK) we can see their stock performance compared to the Regional Banking ETF (Ticker KRE).

chart lc ondeck SPDR

This stark dislocation in market performance is also evident in the volatility measurements of these stocks over a similar time period.  Both LC and ONDK’s historical volatility are vastly higher than their regional bank rivals and even when compared to the leading Technology Sector ETF (Ticker Symbol XLK)

Historical Volatility – Technology Sector ETF – XLK

Term HV 1 Week ago 1 Month ago 52-Week High 52-Week Low
180 Days 19.65% 19.54% 18.72% 19.76%  01/15/2016 12.63%  01/21/2015

 

Historical Volatility – KRE – Regional Banking ETF

Term HV 1 Week ago 1 Month ago 52-Week High 52-Week Low
180 Days 22.41% 22.26% 21.26% 22.41%  01/21/2016 18.04%  01/21/2015

 

Historical Volatility Lending Club

Term HV 1 Week ago 1 Month ago 52-Week High 52-Week Low
180 Days 44.47% 43.34% 40.36% 72.28%  08/28/2015 38.13%  11/12/2015

 

Historical Volatility OnDeck Capital

Term HV 1 Week ago 1 Month ago 52-Week High 52-Week Low
180 Days 70.37% 72.87% 70.24% 76.64%  09/03/2015 61.08%  11/30/2015

 

The concept that these technology companies will be able to scale and build loan volumes more quickly than a typical bank has so far not to come to fruition.  In fact when you pull back the curtain their origination engine for generating new loan volume has not been a new technological solution.  They still generate new loan volume just like every other player in this space both new and old, through time tested method of direct mailings.

The public market’s reaction to these financial technology companies is also flowing over to the privately funded firms with down rounds being recorded at some of the more prominent names in the fintech arena. Industry players are taking note of this as well as evidenced by the recent postponement of the 3rd IPO in this space by Elevate Credit.

Reinvention of time tested businesses is always a challenge and it appears that the second oldest profession in the world has not changed its stripes, its just redesigned its store front.

 

Author : Drew Froelich

 

About the author

George Popescu

Serial entrepreneur.

George sold and exited his most successful company, Boston Technologies (BT) group, in 2014. BT was a technology, market maker, high-frequency trading and inter-broker broker-dealer in the FX Spot, precious metals and CFDs space company. George was the Founder and CEO and he boot-strapped from $0 to a $20+ million in revenue without any equity investment. BT has been #1 fastest growing company in Boston in 2011 according to the Boston Business Journal and the only company being in top 10 fastest in 2012-13 as it was #5 in 2012. BT has been on the Inc. 500/5000 list of fastest growing companies in the US for 4 years in a row ( #143, #373, #897 and #1270). After the company sale in July 2014 until February 2015 George was Head-of-Strategy for Currency Mountain ( www.currencymountain.com ), a USD 100 million+ holding company focused on retail and medium institutional currencies, precious metals, stocks, fixed income and commodities businesses.

• Over the last 10 years, George founded 10 companies in online lending, craft beer brewery, exotic sports car rental space, hedge funds, peer-reviewed scientific journal ( Journal of Cellular and Molecular medicine…) and more. George advised 30+ early stage start-ups in different fields. George was also a mentor at MIT’s Venture Mentoring Services and Techstar Fintech in NY.

• Previously George obtained 3 Master's Degrees: a Master's of Science from MIT working on 3D printing, a Master’s in Electrical Engineering and Computer Science from Supelec, France and a Master's in Nanosciences from Paris XI University. Previously he worked as a visiting scientist at MIT in Bio-engineering for 2 years. George had 3 undergrad majors: Maths, Physics and Chemistry. His scientific career led to about 10 publications and patents.

• On the business side, Boston Business Journal has named me in the top 40 under 40 in 2012 in recognition of his business achievements.

• George is originally from Romania and grew up in Paris, France.

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