Public Markets Cool on Online Lenders

Lending Club’s successful IPO last December was supposed to be the breakout moment for the fast-growing online lending sector. Instead the period since the debut has turned into a lull that highlights how these businesses are more closely tied to macroeconomic activity than other rising tech companies. And it suggests that those investors who thought the company and its ilk heralded a seismic disruption of banking are realizing it may not come as quickly and cleanly as it once seemed.

After a big rally in its first week of trading, Lending Club’s stock fell into a slump that infected another online lender that went public shortly after, OnDeck Capital. A third company in the space, Stockholm-based TrustBuddy, has also spiraled downward. The trio fell between 20 to 30 percent since mid-December.