Lending Club Corp. (NYSE:LC) shares skyrocketed more than 60 percent Thursday in their debut on the New York Stock Exchange. The San Francisco startup, an online peer-to-peer lending company connecting borrowers and investors, priced its initial public offering at $15 a share late Wednesday, topping Wall Street expectations for $12 to $14.
But shortly after the opening bell, Lending Club's shares surged to $24.75 and at one point climbed 67 percent to $25.44 -- valuing the company at more than $9 billion -- before easing slightly in early-afternoon trading. The company raised $870 million on 58 million shares sold.
“We view the Lending Club IPO as a bellwether for the peer-to-peer lending space,” Sam Hodges, co-founder of Funding Circle, a San Francisco-based financial technology startup assisting small businesses in the peer-to-peer lending space, said.
Hodges likened the way the Lending Club IPO is helping peer-to-peer lending to how Uber and Airbnb changed their respective sectors. Uber disrupted the transportation and logistics industry by bringing people who aren’t professional taxi drivers into that market and offering a service to people who need rides, Hodges said, while Airbnb enabled private homeowners to rent space they aren’t using to people who need temporary accommodations.
“What this space is doing is allowing investors who are looking for yield to put that money to work with borrowers,” Hodges said. “That’s not something those investors had the opportunity to do before. So there’s a common thread around this sharing global economy that all three of these businesses share.”
Lending Club, founded by CEO Renaud Laplanche in 2007, is the largest of its kind and has facilitated more than $5 billion in loans in the last seven years, including more than $1 billion in the second quarter of 2014. Company directors include Larry Summers, former U.S. Treasury secretary, and John Mack, a former Morgan Stanley CEO.
“This will likely be remembered as that moment where people see this generational shift in the way finance works, and instead of going to a bank, now it’s possible to go to an online market place and get capital directly from people who want to invest," Hodges said. "That’s very exciting.”
Morgan Stanley, Goldman Sachs & Co., Citigroup Inc. and Credit Suisse served as the underwriters.