Updated Aug 6 at 3:24pm ET.
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Federal Reserve Governor Lisa Cook suggested that the central bank might need to raise interest rates further if inflation does not cool down. The Federal Reserve is the group that sets the baseline cost of borrowing money in the U.S. to keep the economy stable.
For a lender like LendingClub, higher interest rates are a double-edged sword. While the company can charge more for the loans it makes, it also has to pay more to attract the deposits it uses to fund those loans. If rates stay high or rise, it could also make it harder for some borrowers to pay back their debt, which would hurt the company's profits.
Reports suggest the U.S. and Japan are coordinating to support the yen in a way that could pressure the Federal Reserve to ease its monetary policy. This matters for LendingClub because its business depends on the gap between the interest it charges on loans and the interest it pays to depositors.
If the Fed is forced to lower rates or loosen conditions to support global currencies, it could change how much LendingClub earns on its loan portfolio. While lower rates can encourage more people to take out loans, they also tend to shrink the profit margins for banks that rely on high interest spreads.
Source: WSJ
Analysts have maintained a steady stream of positive ratings for the company over the past year. Most analysts rate the stock a buy, and the average price target of $23 suggests a 17% gain from today's price.
Management has beaten its own profit targets for eight straight quarters. This shows they have a very good handle on their costs and are conservative about what they promise.