The origins of E-LOAN hark back to 1992,
when the founders started a brick-and-mortar loan brokerage business. By
1996, they saw the power of the Net and went digital. The company attracted
top venture capitalists and strategic investors. Inevitably, the company
had a high-profile IPO. However, as interest rates surged and Net stocks
collapsed, the stock price of E-Loan plunged, as well. The 52-week range is
$2-3/4 – $29-7/8. Currently, the stock trades at $2-23/32. The market cap
is a lowly $143.8 million
Originally, the company focused primarily on mortgage lending. This had
many investors concerned. After all, mortgage lending is a volatile
industry.
As a result, E-Loan began to diversify its product line. In September 1999,
the company purchased CarFinance.com. What’s more, the company has since
implemented programs to offer lending services for credit cards and small
business loans.
The company’s site is definitely easy to use. And the savings are enticing.
On average, consumers save over $1,000 on home loans and auto loans.
The company has been able to monetize its expanding product line. In the
past quarter, the company had $9 million in revenues, which was up 78
percent from the same period a year ago. The company has also been paring
down its losses. Although, they were still large: $8.5 million.
The company has the advantage that its competition is ailing – or is being
eliminated altogether. For example, this week Mortgage.com announced it was
closing down its operations. The company said it will sell the rights to
its domain name. The stock price is now a measly 1/16 and the market cap is
$2.8 million.
As for E-Loan, the company had the advantage of raising $40 million in a
private placement during June. And the backers were strong: Schwab, Abbey
National, FT Ventures, Benchmark Capital and Technology Partners.
True, there is still considerable risk with E-Loan. However, the company
has less competition and committed backers. And, if interest rates fall and the
company gets to profitability, there could be a pop in the stock.
