One day a frustrated millionaire wasn't happy he wasn't doubling his value day after day, so he decided he'd solve his own problem. He took his millions and began a start up lending institution based in RESERVED LIQUIDITY.
What is different about this lending company than any other? This lending institution isn't a traditional bank. The frustrated millionaire assessed the value of companies within "Techy" Wall Street and decided after a decade of "Fed" indulgence there was more fluidity with Silicon Valley than anywhere else on Earth. He came up with an idea and patented it and then solicited companies with high liquidity and signed them on to lend their monies to make more money by ten times their current income with the promise of far, far more in the long run.
January 22, 2016
By William D. Cohan
...San Francisco peer-to-peer lender (click here) is a star in the world of "fintech," a growing sector made up of financial technology companies bent on disrupting the traditional banking sector. Its backers include venture capital royalty such as Kleiner Perkins and Union Square Ventures, not to mention Google (GOOG) and Alibaba (BABA). The startup's gold-plated board of directors includes luminaries such as John Mack, the former CEO of Morgan Stanley (MS); former Treasury Secretary Larry Summers; and Mary Meeker, the one-time doyenne of Internet IPOs who is now a Kleiner partner. In other words, Lending Club (LC) had assembled a very smart-money crowd. Its much-buzzed-about offering was viewed, understandably, as a slam dunk.
In December 2014, led by underwriters at Morgan Stanley and Goldman Sachs (GS), Lending Club priced its shares at $15, above the high end of the proposed range of $12 to $14. The IPO was 20 times oversubscribed and instantly gave the company a market value of nearly $6 billion. On the first day of trading, Lending Club's stock jumped almost 70% before pulling back to close at $23.42 a share, a one-day pop of 56%. For shareholders who got out quickly, it went in the books as another very successful offering.
Then reality set in. Lending Club's stock peaked about a week after its IPO, at nearly $26 a share, and has been retreating ever since. Never mind that the startup delivered extraordinary financial results in its first year as a public company: Lending Club's operating revenue was up more than 100% in the first nine months of 2015 compared with the same period in 2014, and its Ebitda, a measure of earnings before subtracting expenses such as interest and taxes, was up more than 200%. The stock recently traded around $8 a share, nearly 50% below its $15 IPO price....
What is different about this lending company than any other? This lending institution isn't a traditional bank. The frustrated millionaire assessed the value of companies within "Techy" Wall Street and decided after a decade of "Fed" indulgence there was more fluidity with Silicon Valley than anywhere else on Earth. He came up with an idea and patented it and then solicited companies with high liquidity and signed them on to lend their monies to make more money by ten times their current income with the promise of far, far more in the long run.
January 22, 2016
By William D. Cohan
...San Francisco peer-to-peer lender (click here) is a star in the world of "fintech," a growing sector made up of financial technology companies bent on disrupting the traditional banking sector. Its backers include venture capital royalty such as Kleiner Perkins and Union Square Ventures, not to mention Google (GOOG) and Alibaba (BABA). The startup's gold-plated board of directors includes luminaries such as John Mack, the former CEO of Morgan Stanley (MS); former Treasury Secretary Larry Summers; and Mary Meeker, the one-time doyenne of Internet IPOs who is now a Kleiner partner. In other words, Lending Club (LC) had assembled a very smart-money crowd. Its much-buzzed-about offering was viewed, understandably, as a slam dunk.
In December 2014, led by underwriters at Morgan Stanley and Goldman Sachs (GS), Lending Club priced its shares at $15, above the high end of the proposed range of $12 to $14. The IPO was 20 times oversubscribed and instantly gave the company a market value of nearly $6 billion. On the first day of trading, Lending Club's stock jumped almost 70% before pulling back to close at $23.42 a share, a one-day pop of 56%. For shareholders who got out quickly, it went in the books as another very successful offering.
Then reality set in. Lending Club's stock peaked about a week after its IPO, at nearly $26 a share, and has been retreating ever since. Never mind that the startup delivered extraordinary financial results in its first year as a public company: Lending Club's operating revenue was up more than 100% in the first nine months of 2015 compared with the same period in 2014, and its Ebitda, a measure of earnings before subtracting expenses such as interest and taxes, was up more than 200%. The stock recently traded around $8 a share, nearly 50% below its $15 IPO price....
Today, the idea of the frustrated millionaire is not much more than exactly that, an idea. He is no longer alone being frustrated, Silicon Valley is frustrated, too. This idea will end up causing fiscal problems for Silicon Valley and guess what happens next?
When Silicon Valley decides it needs more income to stockholders the first place that will happen is with labor. Where unemployed labor find monies 'until they find their next job;" in the value of their homes.
This is what is occurring with Wall Street. It is called greed, not investment. In the early days of the IPO, Day Traders took advantage of speculation and bought the stock when low and sold when it was high. All that equity brought in by releasing a new IPO has been lost to the company. Now, the only people sincerely involved with the lending are the original owners and lenders because they have no choice, otherwise, their own stocks will tumble.
The previous paragraph is what I would expect to have happened. It may be a very different reality, but, I don't see how.
There are a lot of people employed in Silicon Valley with a new wealth to this region of California, including San Francisco. This is an interesting insight to The Valley because the lower middle class and poor have been pushed out of their long time homes by the techy nouveau riche. The low income citizen and poor have been faced with movement to the extremes if they can find it, but, more likely simply homeless.
If this venture proves to be as bad as it's potential, those forced from their homes may be finding themselves back there again.
Bailout? What Bailout?
