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Lending Club: Unattractive Valuation Persists Despite New Partnerships

The recent partnerships with tech giants Google (GOOG) (GOOGL) and Alibaba Group (BABA) add to the value proposition for Lending Club (LC), but the online marketplace that connects borrowers with lenders still appears grossly overvalued. Until some numbers are released, it isn't clear how many businesses will utilize this service. Not to mention that a huge red flag exists considering these partnership deals don't provide the same network effects of the typical loan on the Lending Club platform.

The valuation of the platform remains a major deal breaker for most investors with Lending Club still worth more than $7 billion even after the post IPO selloff. The stock trades at roughly 20x the expected 2015 revenues of $375 million. Can these two partnerships produce enough revenue to justify reaching a 10x revenue multiple? Is the stock even a buy if these partnerships lead to a doubling of revenue?

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