LendingClub stock price forms death cross: buy the dip?

LendingClub stock price has crashed and formed a death cross pattern, pointing to more downside in the coming months. LC dropped to $10 this week, down by over 42% from its highest level this year. This crash has led to a big wipeout as the market cap has dropped to $1.22 billion from over $2 billion a year earlier. 

LendingClub stock price analysis

The daily chart shows that the LC share price has been in a steady downtrend in the past few months. It has crashed from a high of $18.80 in December to the current $10.75, its lowest level since September 26.

The stock has moved below the 50% Fibonacci Retracement level at $13.40 and is now hovering at the 61.8% point. It has also formed a death cross pattern as the 50-day and 200-day Exponential Moving Averages (EMA) crossed each other. 

A death cross is one of the riskiest patterns in the market. Additionally, the Average Directional Index (ADX) has increased to 36, the highest point since December last year. A rising ADX indicator is a sign that a trend is strengthening. 

Therefore, the path of the least resistance for the LendingClub stock price is bearish, with the next point to watch being at $7.70, the 78.6% retracement level. This view will become invalid if it moves above the 38.2% retracement point at $13.40. 

LendingClub business is doing well

LendingClub is a top American fintech company that has gone through major changes in the past few years.

It as initially started as a peer-to-peer lending company where people offered loans to others in a secure way through its platform.

LendingClub has now moved away from this business model, a strategy that accelerated when it acquired Radius Bank, a transaction that completed in 2021. This was a big buyout since it gave it a banking license. It has become one of the biggest digital banking organizations in the US.

The most recent results showed that LendingClub’s total assets jumped by 20% to over $10.6 billion in the fourth quarter. This growth was mostly because the company acquired a $1.3 billion loan portfolio and the success of its structured certificates program. 

At the same time, LendingClub’s total deposits continued rising, hitting $9.1 billion during the quarter. This growth was driven by a $1.2 billion increase in its LevelUp Savings account. This account allows users to earn up to 4.50% APY. 

LendingClub has a strong balance sheet, with over $3.3 billion in available liquidity and a CET1 capital ratio of 17.3%. This is a big capital requirement ratio that is higher than other US banks like Goldman Sachs, JPMorgan, and Bank of America. 

These numbers mean that LendingClub’s business is seeing a strong uptick. Revenues rose to $217 million in the fourth quarter from $201 million a year earlier. 

According to Yahoo Finance, LendingClub’s revenue will come in at $213 million in the first quarter, a 18.36% increase from the same period a year earlier. Its guidance for the second-quarter will be $229 million, and its annual revenue will be $935 million. 

LendingClub will also continue being a more profitable company, with the annual earnings per share growing from $0.45 in 2024 to $0.78 this year and $1.33 in 2026. One potential catalysts

Wall Street analysts are optimistic about the LendingClub stock price forecast. The average stock target is $17.65, much higher than the current $10.75. Some of the most bullish analysts are from companies like JP Morgan, KBW, and Piper Sandler. 

Read more: Here’s why the LendingClub stock price may surge 53% soon