Back to top

Should Elevate Credit IPO Worry Other Online Lenders?

Read MoreHide Full Article

On Apr 6, a Texas-based lending company, Elevate Credit, Inc. went public on New York Stock Exchange, priced at $6.50 per share. This was the company’s second attempt to be listed after postponing its IPO in Jan 2016 due to unfavorable market conditions.

The company offers online credit facility to people who have credit scores less than 700 in the U.S. and the U.K. They assess a customer’s credit worthiness with reference to their bank accounts. They also use software to examine their online research habits.

Is Elevate Credit’s listing a cause for concern for its peers – LendingClub Corporation (LC - Free Report) and On Deck Capital, Inc. (ONDK - Free Report) , among others?

On the first day of trading, Elevate Credit’s shares increased 10.9% versus LendingClub’s gain of 1.7% and On Deck Capital’s closing at the price it opened with. But this outperformance in terms of price might not be an indication of threat for the peers.  

These two companies have been trading for quite a few years now and have experienced a decent growth so far.

While Elevate Credit  is currently trading below its competitors as well as the consumer finance industry in terms of price/sales, its growth potential is yet to be estimated by the market.   

The model of lending and customer examination used by the company have not been experienced at times of recession and the changing interest rate environment, making it a risky investment as of now. Moreover, it reported high net charge-off rates in the last few years. Hence, other lending companies might appear more lucrative to investors at present compared to Elevate Credit.

Currently, LendingClub has a Zacks Rank #3 (Hold) and On Deck Capital carries a Zacks Rank #2 (Buy).

A couple of other stocks in the financial space worth considering include KB Financial Group Inc. and BGC Partners, Inc. (BGCP - Free Report) . Both these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

KB Financial’s earnings estimates were revised upward by a solid 7.4% for the current year in the past 30 days. Also, its share price increased 53.2%, over the last one year.

BGC Partners’ earnings estimates were revised 5.3% upward, over the last 30 days. Further, its shares jumped 26.7% in the last one year.

Zacks’ Best Private Investment Ideas                                                                                       

While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.    

Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Click here for Zacks' private trades >>


In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

LendingClub Corporation (LC) - free report >>

BGC Partners, Inc. (BGCP) - free report >>

On Deck Capital, Inc. (ONDK) - free report >>

More from Zacks Analyst Blog

You May Like