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OnDeck Capital: Focus On This Key Stat

Summary

OnDeck Capital generated strong Q2 results when focusing on the correct metrics.

The market has forgotten that the company is still a fast growing fintech.

The stock is still incredibly cheap after bouncing off an extremely low valuation.

For any sector, the key is always finding the key metric that drives long-term shareholder wealth. In the case of online lenders, one key metric clearly stands out above others though the market currently ignores it in favor of more traditional metrics.

In the case of OnDeck Capital (NYSE:ONDK), the stock has seen a recent rally after reassuring Q2 results. Now the question is whether the recent rally to above $6 is any reason to abandon the previous bullish thesis.

Focus On Originations

The big issue encountered this year was a general online loan funding pullback by institutional investors. The demand picture for online loans didn't necessarily change. The problem though is that how loans on the platform are handled by OnDeck Capital greatly impacts the short-term financials.

For Q2, OnDeck Capital generated a 41% increase in loan originations to $590 million. The growth rate slowed from the prior years, but the company increased growth sequentially from only 37% during Q1.

The below chart shows how during 2015, originations, loans...


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