LendingClub (LC) shares plunged 14.44% in intraday trading on Wednesday following the release of the company's first quarter 2025 financial results, which fell short of analyst expectations despite beating revenue estimates. The significant drop came as investors expressed concerns over the online lending platform's earnings miss and increased provisions for credit losses.

For Q1 2025, LendingClub reported earnings per share (EPS) of $0.10, missing the consensus estimate of $0.11 and declining from $0.11 in the same quarter last year. However, the company's revenue came in at $217.71 million, surpassing analyst projections of $214.51 million and marking a 20.5% increase year-over-year. Despite the revenue beat, investors seemed more focused on the company's profitability and risk management.

A major concern for investors was the sharp rise in LendingClub's provision for credit losses, which jumped to $58.1 million from $31.9 million in the year-ago quarter. This significant increase suggests the company is preparing for potential loan defaults in a challenging economic environment. The company also increased its qualitative reserves, corresponding to an assumed 5.3% peak unemployment rate, reflecting heightened macroeconomic uncertainty. Additionally, net income for the quarter declined to $11.67 million from $12.25 million year-over-year, further dampening investor sentiment. Looking ahead, LendingClub provided guidance for Q2 2025, anticipating originations of $2.1 billion to $2.3 billion and pre-provision net revenue (PPNR) in the range of $70 million to $80 million. While the company remains optimistic about its growth prospects, the market's reaction suggests ongoing concerns about the potential impact of economic headwinds on LendingClub's business model.