: LendingClub to lay off 14% of staff, as higher interest rates weigh

by | Jan 12, 2023 | Stock Market

Online lending platform LendingClub Corp. on Thursday said it would lay off 225 employees, or 14% of its staff, as higher interest rates discourage demand for loans, and the company forecast fourth-quarter revenue that was below expectations. The decision follows “reduced marketplace revenue following the Federal Reserve’s historic pace of interest-rate increases,” company executives said in a statement.

Shares of LendingClub
rallied 3.4% in after-hours trading. The stock finished regular trading 2.2% higher. As a result of the layoffs, management said they expected to take non-recurring, pre-tax charges of around $5.7 million. They said $4.4 million of that was expensed in the fourth quarter. Executives expect the job cuts to produce savings, in compensation and benefits, of roughly $25 million to $30 million this year. LendingClub also forecast fourth-quarter sales of $260 million to $263 million, compared with FactSet forecasts for $263 million. For the full year, management said they expect sales between $1.185 billion and $1.188 billion. FactSet estimates call for $1.188 billion. LendingClub tries to help people find lower-cost loans and other financial services. However, the Federal Reserve’s interest-rate hikes — an effort to cool off the economy and in turn put a lid on rising prices — have pushed up rates on credit cards, auto loans and other forms of credit …

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