U.S. producer prices drop, LendingClub (LC) IPO success and Seaworld (SEAS) CEO steps down

Bourbon & Bayonets / Friday, December 12th, 2014

Markets were heading lower on Friday after U.S. producer prices fell last month. The Labor Department said that the producer prices index dropped 0.2% in November. The drop was partially attributed to the sinking price of gasoline and food. Over the past 12 months, there has been a rise of 1.4%, which notes the smallest 12 month increase since February. Wholesale gasoline prices plummeted 6.3%, which is the largest drop in over two years. There was a decline in food prices of 0.2%. The core measure of producer inflation came in for flat for November and moved up only 1.8% over the past 12 months. This data subtracts food, energy ad trade services. The Federal Reserve’s target for this number is 2%.

Shares of LENDINGCLUB CORP (LC) were heading higher after the company’s initial public offering brought in more funds than projected. The company raised $870 million from the IPO and sold 50.3 million shares. Shares started trading at $15 and were up 65% to $24.75 by the end of the day. LendingClub is a company that sets up loans to individuals and small businesses via the Internet. They have investors that can commit as little as $25 to a loan. Since their origination in 2007, they have set up over $6 billion in loans. The company makes money by charging transaction fees and servicing fees on the loans it sets up. Funding Circle co-founder, Sam Hodges, said, “We see the lending club IPO as a bellwether for a major structural shift in the way that consumers and small businesses get access to credit. Its one step in what will be a multiple step shift in companies like ours coming to scale and changing the ways that parts of the market work.”

Shares of SeaWorld Entertainment, Inc. (SEAS) were trading higher after news was released that their CEO would be stepping down and the company would be cutting jobs. The struggling theme park has been having attendance issues which was partially attributed to negative publicity that stemmed from the 2013 film, “Blackfish.” The company has noted a rise in attendance only twice in the past seven-quarters. Jim Atchison, the current CEO, will be stepping down and Chairman David D’Alessandro, will step in as interim CEO starting on January 15. The company has not stated how many jobs they will be cutting but they have announced a restructuring plan that is set to save them roughly $50 million by last 2015. In a statement last month, Atchison said, “Clearly, 2104 has been a challenging year, but I am confident we are taking the necessary steps to address our near term challenges and position the company to deliver value over the long term.”

That’s all for today,

Warren Gates, Normandy Research

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