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written by reader Lendingtree(TREE)

By Anonymous Questions, January 16, 2016

I noticed that Lendingtree has fallen quite a bit in the past week. A quick look at the ticker on finviz.com shows its currently trading at half its target share price. I was wondering if you could give some insight into why the drop occurred in a future article? Thanks!

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Normally Dubious
6 years ago

Have you ever done business with Lending Tree? They send you five potential loans all at not-very-good rates, ask which one you want, and then pester you for a year when you don’t take any of them. Maybe the word is out for good reason

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mannydas
mannydas
6 years ago

I would not borrow money from them, because you will pay a higher interest. But, I am looking into investing/lending with them. Return seems to be good. Minimum is $25, so you can diversify by doing several loans.

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Travis Johnson, Stock Gumshoe
Admin
Reply to  mannydas

I think you’re mixing up LendingTree (which is a loan broker, they try to find a few different banks to bid on your mortgage refinance, for example) and LendingClub, which is a “peer to peer” lender that processes loans for home improvement and credit card refinancing (mostly) and gets the capital from investors who lend in those $25 increments.

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Travis Johnson, Stock Gumshoe
Admin

FYI, I am experimenting with Lending through LendingClub, but the risks are real. I’ve written about it a couple times and see the major risk as systemic, what happens if unemployment climbs and defaults start to rack up and their loans are much less important (in the borrower’s eyes) than mortgage or car payments. There’s also underwriting risk and other kinds of risk, this is like investing in individual junk bonds, in my opinion, so it’s reasonable to consider it only if you’re coming in with that perspective.

There’s a post from the Motley Fool on this topic here as well: http://www.fool.com/investing/general/2016/01/17/p2p-loans-a-future-disaster.aspx

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mannydas
mannydas
6 years ago

You are right. I mixed up LendingTree with LendingClub. My comment is ment to be for LendingClub.

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Travis Johnson, Stock Gumshoe
Admin

As far as TREE goes, I have never looked at the stock. Presumably growth expectations got crazy when the stock soared in the Summer, but I don’t really know (shares are down sharply in the last 4-6 months, but are still up 50% year over year). Big moves for a pretty small stock, maybe worth some further research — thanks.

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