LendingClub is laying off 460 employees, or 30% of its staff
unemployment in the U.S.LendingClub, the San Francisco company that makes online loans to help consumers refinance credit card debt, is laying off 460 employees,. That’s 30% of its staff. CEO Scott Sanborn is taking a 30% pay cut, while the rest of the executive team is taking a 25% reduction. Employees making $100,000 or less didn’t get pay cuts, says LendingClub head of communications Anuj Nayar.
The move comes as the company expects revenue to fall significantly this year. Since LendingClub isn’t a bank , it funds loans in two ways: by matching investors directly to borrowers, or by using a line of credit from a bank and then packaging and selling the loans to large investors. While the coronavirus has caused 22 million job losses in the U.S., consumersto pay back online loans.
LendingClub helped pioneer online lending in 2006, making it faster and easier for people to get lump-sum loans ranging from $1,000 to $40,000. It rose to a $10 billion market value after going public in 2014. But as the category got more competitive, the cost to recruit new customers rose rapidly, and LendingClub couldn’t reach strong profitability. After CEO Renaud Laplanche was fired in 2016 for allegedly selling, its stock price crashed and never recovered.
Over the past two months, LendingClub’s stock has fallen 40%, hovering around a $500 million market value today. It’s the largest personal loan lender in America, originating about $12 billion in loans last year. “It’s never easy to lose people who are not just colleagues, but teammates and friends,” CEO Scott Sanborn said in a statement. “However, it was necessary to realign our staffing to the current business environment. With these actions, we believe we are well positioned to achieve our long-term strategic goals and better serve our members.”
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