In Business North Carolina‘s annual “Best stocks for 2016” feature, we asked five North Carolina investment pros to offer their three favorite stocks — and one to avoid. Charlotte asset manager Don Olmstead of Novare Capital Management suggested investors be wary of LendingTree LLC, noting it had tripled over the past three years and “its high valuation implies high expectations.”
Olmstead proved prophetic Wednesday as LendingTree (TREE) tumbled 29% on another bad day for stocks. The Charlotte-based company this week said it expects to report annual revenue growth of 51% when it releases earnings later this month. Meanwhile, its earnings before interest, taxes and depreciation should increase about 80%, the company said.
“Both our mortgage and non-mortgage business continued to perform exceptionally well in the fourth quarter,” said Doug Lebda, founder and CEO said in a statement this week. “Our mortgage business continued its growth trajectory through what is typically a seasonally-challenging period and despite market fears over rising interest rates. Additionally, we continue to see new growth drivers emerge and we’re particularly pleased with the performance in our credit cards and home equity marketplaces.”
The comments obviously didn’t impress a lot of investors of the Charlotte-based company, which the Motley Fool investment website calls “somewhat of a leveraged bet on the greater online lending business.”
The company made a presentation at an investment conference Wednesday, prompting Motley Fool to suggest “one can only speculate about what might have slipped during conversations with investors and analysts.” LendingTree’s website did not include any presentation materials for the conference.
The company is not aware of any reason to justify the decline, spokeswoman Megan Grueling says.
At Wednesday’s close of $61.14, LendingTree still trades more than 40% higher than a year earlier. Shares traded for less than $2 during the 2008 financial crisis, but rocketed as high as $133 last spring.
Lebda owns 15% of LendingTree’s shares, according to a November filing.
Close observers may remember LendingTree as the company for which N.C. Governor Pat McCrory and U.S. Rep. Mark Sanford, a former South Carolina governor, briefly served as directors.