[Sean Cash]

The Wall Street Journal has the story and it's for paid users only but if you google: Small-Business Lender OnDeck Prepares to File for IPO

and click the link, you'll get to read the whole thing.

Key points:
Possible $1.5 billion valuation
Looking to raise $200 million in capital

[isaacdstern]

Offering May Seek to Raise $200 Million at Valuation of About $1.5 Billion
http://online.wsj.com/articles/small...ipo-1408040903

[Chambo]

this could be really interesting.

[Chambo]

you guys wanted oversight and federal scrutiny? Well, now you have it....

[Sean Cash]

We'll be seeing a lot of Noah Breslow on TV around IPO day that's for sure.

[JayBallentine]

My goodness... A $1.5 billion valuation in a $462 billion total market???

[bizloanbroker]

I am first on line to short this stock!

Ondeck is the biggest PONZI scheme since the Madoff mess.

A Ponzi scheme is a fraudulent investment operation where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned by the operator. Operators of Ponzi schemes usually entice new investors by offering higher returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent. The perpetuation of the high returns requires an ever-increasing flow of money from new investors to sustain the scheme

Hopefully it comes out in all the underwriting that will happen before they issue the IPO. They have been raising money from peter to Pay Paul for years and this must be their only way out.

They are telling anyone who will listen that they have a "low single digits" default rate. Well that's not too hard to do when you pick your best 300 performing and "seasoned" merchants and put them into the securitization. The information they decided to leave out was that the rest of their portfolio is gigantic train wreck with default rates closing in on 30%.

Additionally they recently cancelled ISO agreements on about 50 company's saying that it was because of the high default rate that specific portfolio had with them. When in actuality it was because they were worried about the reputation and do not want to be associated with them.

I am a single man shop working out of my living room and had been doing business with OD for 4 years and one day I get a letter they are cancelling my agreement. I call my rep and finally drag it out of him that they are really cancelling my agreement because of a drug possession charge I have from over 20 years ago and they ant be associated with me.

Bottomline is I am out there trying to make a living for my family and these guys dropped me like a bad habit.

This is a bad company made up of bad people and I sincerely hope the truth about them comes out

[JayBallentine]

Can't short an IPO.

[funding pro]

you guys wanted oversight and federal scrutiny? Well, now you have it....

You freaking love torturing yourself. You're like that guy from Boardwalk Empire that goes home and just punishes himself for sinning. I don't want to know what you do with those cheap ceeegars when no one is around.

whipping-boy.gif

[MCNetwork]

That will be the next penny stock...

[Ocean Financing]

Can't short an IPO.

On the day of the IPO, two main parties hold inventory of the stock: the underwriters and institutional and retail investors. As determined by the Securities and Exchange Commission, which is in charge of IPO regulation in the U.S., the underwriters of the IPO are not allowed to lend out shares for short sale for 30 days. On the other hand, institutional and retail investors can lend out their shares to investors who want to short them.

However, only a limited amount of shares would probably be available on the market as the company would've just started trading publicly and the shares may not have been completely transferred. Furthermore, there might be a lack of willingness among investors to lend their shares out to be short sold.

So, while there are regulatory and practical obstacles to doing it, it is still possible to short sell shares in a company the same day the company goes public.

[Chambo]

My goodness... A $1.5 billion valuation in a $462 billion total market???

It's called "Total BS Valuation"

[channin19]

They are telling anyone who will listen that they have a "low single digits" default rate. Well that's not too hard to do when you pick your best 300 performing and "seasoned" merchants and put them into the securitization. The information they decided to leave out was that the rest of their portfolio is gigantic train wreck with default rates closing in on 30%.

Their ISO / Referral channel has a higher default ratio.
As far as the people go everyone may be drinking some kool aid over there ( I heard they have beer on tap too) but everyone has been very easy to work with. And more importantly I've never had a merchant complain about how they were treated by them (service wise not necessarily pricing) .

[Capital Stack]

this rocks.. a lot of analysts on this thread lol

[Sean Cash]

It's called "Total BS Valuation"

Chambo, I heard you loved OnDeck so much that you were trying to pre-buy the stock.

[Chambo]

Chambo, I heard you loved OnDeck so much that you were trying to pre-buy the stock.

I will be on the phone with my broker on day 31 to short the bejesus out of this

[JayBallentine]

I will be on the phone with my broker on day 31 to short the bejesus out of this

Only if it's trading above $5 on day 31. What's the over / under on that?

[Chambo]

Only if it's trading above $5 on day 31. What's the over / under on that?

Good point

[FUNd]

OD has pulled back big time on approvals. This must be part or all of the reason.

[Sean Cash]

There's a lot that outsiders don't know about OnDeck. They know they're a technology based business lender but not much else. Here's my perspective: http://www.merchantprocessingresourc...s-perspective/

[bizloanbroker]

This is misrepresenting what I said. I said my representative called me and I pulled the truth out of him which was that they only cancelled my agreement because of my drug possession conviction from 22 years ago and it had nothing to do with my funded deals default rate. They were only concerned with their reputation and not continuing a relationship we had for 4 years.

If you're a funding company, you probably want to avoid a high default rate. If you determine that defaults are more likely when they come from certain ISOs or certain types of ISOs, you're probably going to try and to reduce those sources of the higher default rate so as to achieve a lower default rate. Ergo, you can't blame OnDeck for dropping ISOs that have default rates that are above what OnDeck views as acceptable.

[Sean Cash]

If anyone is interested in offering their thoughts on what an OnDeck IPO would do for the industry and have them be published on the site's blog or in the magazine, PM me.

[isaacdstern]

Sean-the article you wrote on MPR regarding the OD IPO was one of the best articles I have seen recently. It really represented both sides of the pro/non pro Ondeck argument.

[Sean Cash]

Sean-the article you wrote on MPR regarding the OD IPO was one of the best articles I have seen recently. It really represented both sides of the pro/non pro Ondeck argument.

Thanks Isaac. I appreciate that. It is hard to ignore that OnDeck has just as many critics as they do fans.

[ygs]

Great article Sean, Ondeck is one of those companies that operate with a mysterious subterfuge, it is hard to get a clear read on them, your article nailed that perception perfectly.
One thing that people often overlook is that you don't have to be profitable to rock an IPO (Amazon,Twitter...). The attractiveness of the IPO is not on the current profitability rather on their NPV of their current asset and how much it can grow. One thing in the cash advance industry that we all love are the renewals, its not only about the money returned from the first investment rather the residuals that keep piling on with the renewals, and as On-decks book of business grows their asset value and incidentally their NPV grows exponentially.