During the darkest days of the financial crisis in 2008, LendingTree CEO Doug Lebda watched his Charlotte-based company’s shares dip below $2 as the housing market imploded. He had to cut staff, sell a business unit and conserve cash.
But from that nadir, the online marketplace that matches borrowers with lenders has engineered a remarkable comeback: Revenue has reached new highs, the company is building a new SouthPark headquarters and its shares are now trading around $250.
Since November, LendingTree’s shares have been among the best-performing of all stocks, but good luck getting Lebda to crow about his share price. The 47-year-old is much more eager to talk about efforts to diversify into credit cards and small business loans.
“The stock’s good because the business is good,” Lebda said in a recent interview.
The stock resurgence is the latest milestone for a company that has experienced a roller-coaster history since Lebda founded it in 1996. The company nearly flamed out during the dot-com bust in 2001, became part of an internet conglomerate in 2003 and emerged as a standalone company again in 2008 – just in time for the recession.
That makes the company’s recent resurgence particularly notable. Since the November election, when markets began to surge in general, LendingTree shares have tripled in value, the biggest increase for any financial stock and among the best of any stock in that period, according to S&P Global Market Intelligence.
Analysts say the company’s stock is booming for a variety of factors, including strength in its mortgage business even amid rising interest rates and a push to diversify its product offerings. They expect the stock could go even higher over the next 12 months, barring a slowdown in the economy or other unforeseen factors.
“It’s like the perfect storm … for the stock,” said Hamed Khorsand, an analyst at BWS Financial.
For his part, Lebda lists multiple reasons for the company’s success. Technology, he says, is catching up to LendingTree’s original vision of helping consumers save money by sending them competing loan offers from banks. The company has also made acquisitions in new product areas, he added, and differentiated its business model from competitors.
While all shareholders are benefiting from the jump, Lebda is receiving a sizable boost because he owns about 2.7 million LendingTree shares, or about 20 percent of the total, according to the company’s latest proxy filing. But Lebda says the hundreds of millions of dollars of wealth he has accumulated on paper is “not something I ever focus on.”
“I feel good about it from the standpoint of our employees,” said Lebda. “I get to see them achieve their dreams.”
‘It was a risk’
LendingTree’s roots date to 1994 when Lebda, then a young accountant in Pittsburgh, found getting a mortgage for a condo a major hassle. He thought the process could be improved online and began developing an idea for a new company.
Working on his business model in his free time, he moved on to business school at the University of Virginia but ultimately decided to drop out and pursue his new company full time – partly because a summer job with Charlotte-based NationsBank didn’t work out. Now familiar with Charlotte, however, he decided to build his startup in the city, with his first office in his spare bedroom in Ballantyne.
In 2000, when Lebda was just 29, the company went public, joining a host of other “dot-coms” cashing in on Wall Street. The company made a national name for itself with a heavy dose of TV commercials, but it had to scramble for funding in 2001 when the dot-com economy crashed.
Two years later, Lebda agreed to sell his company to Barry Diller’s internet conglomerate IAC/Interactive for about $700 million. The LendingTree founder joined New York-based IAC, eventually rising to president, overseeing companies such as Ticketmaster and the Home Shopping Network.
By late 2007, Diller had decided to remake his conglomerate in a plan that included spinning off LendingTree as it struggled with a sharp downturn in the mortgage and housing markets. Lebda said he was on the fence about what he wanted to do next, until a meeting with former General Electric chief executive Jack Welch, an IAC adviser who has mentored Lebda. The famed CEO told him he was crazy if he didn’t go back to the company he had created.
“It was a risk, but I thought it had to be done,” said Lebda. “I knew the promise was still there. I had confidence in our team.”
Lebda as pitchman
Initially rebranded as Tree.com, the company officially split off on its own in August 2008, trading once again under its old “TREE” stock ticker. It started out with about 1,000 employees, but that number fell to as low as 174 in 2012 after staff cuts and strategy changes.
LendingTree, however, is on a growth path again.
In November, the company announced plans to move into new offices in SouthPark and nearly double its workforce of about 360 employees, which is mostly split between Charlotte and California. In return, it could receive up to $4.9 million in tax incentives.
The expansion coincides with a series of acquisitions that have helped diversify LendingTree’s product offerings. Since November, the company has announced four deals with a total price tag of up to $213.5 million, including the recent purchase of a Charleston-based company that matches small businesses with loans.
Financial stocks received a boost with the election of Donald Trump in November, on the anticipation of reduced regulation and increased economic growth.
But LendingTree’s shares have fared better than any other financial stock, rising 202 percent as of Thursday’s closing price of $252.15, according to S&P Global Market Intelligence. Among all companies with a value of more than $1 billion, the stock has had the 12th-biggest increase since the election, according to the research firm. (The shares on Friday closed down about 2 percent at $246.75.)
Analysts expect LendingTree’s shares to keep climbing, especially after the company said in July that its full-year revenue could reach $590 million, up from an earlier projection of up to $545 million. Jed Kelly of Oppenheimer & Co., for instance, said it’s possible it could rise another 20 percent over the next 12 months.
Amid the company’s comeback, you may have noticed that Lebda is also taking a turn as the company’s TV pitchman. That’s a change from LendingTree’s long reliance on humorous commercials, including using a green “spokespuppet” named Lenny who jabs consumers who don’t shop around for the best interest rate.
Lebda says he long resisted going on the air himself but decided having the CEO personally explain how he once had trouble getting a loan was a powerful way to tell the company’s story. The ads have tested well, he says, but don’t worry: “You’ll still see Lenny running around.”