These charts show statistics for the performance of all prosper.com loans. Each curve represents the set of loans that were created in one calendar month. The vertical axis is the fraction of those loans that have "gone bad", in other words are 1 month late or worse (up to and including default or "charge off" as it is now called). The horizontal axis is the observation date. All data comes from Prosper.com's performance web page.
The worst month so far is now February '07. Of the loans originated by Prosper.com in February '07, 45.3% have now gone bad. Yipes!
More detail can be found in my earlier posts.
Click on the chart to see a larger clearer version.
Here's a chart of the same data in which each curve has been slid to the left to a common origin. The horizontal axis is now days since loan origination month.
Explanation of methodology can be found in my prior postings in this blog, and in forum discussions on the old prosper forum, now archived at www.prosperreport.com
Many of the very early posts in this blog are still on point, and provide background on prosper, from a lender's perspective. If you're new to this, please read old posts before sending questions.
Not much news from prosper.com this month. Lenders are waiting to see Prosper's year-end SEC filing (form 10K) which should issue any day now. This will give us an update on how much cash Prosper has left. Based on the September 30'th quarterly SEC filing, I estimated that Prospser has enough cash to live until April 1, 2010. Some time in the next few days the 10K will issue, and we'll learn how Prosper's management has been managing its cash. If they've been frugal, perhaps they can last a bit longer, or ...
As we discuss the possibility of Prosper's next round of venture capital, it is meaningful to look at the scale of Prosper's business, and how it is growing. A new investor in Prosper's business wants to see growth of course. Prosper's business is not sustainable unless it is able to grow to something like 10x its present size, so growth is absolutely essential. The last few months have been disappointing. Where is the growth? This is sad to see. This company once had enviable buzz. Now their marketing is a horrible failure.
PS: The best discussion among P2P and Prosper.com lenders is found on prospers.org. See you there!
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How many states are they in now? It used to be all 50, right? Then the SEC thing and now I know I can't lend anymore even if I wanted to b/c I'm in OH. Lending Club has the same problem, which is frustrating b/c it means I'm left out in the cold when I could really use the extra yield.
ReplyDeleteMatt,
ReplyDeleteYou are lucky to NOT be able to invest in Prosper. Study the above charts. You cannot win as a lender.
Matt, you should still be able to purchase Lending Club loans on their secondary market even if you can't qualify as a primary lender. Stay as far away from Prosper as you can! i doubt they will be around much longer.
ReplyDeleteFred,
ReplyDeleteGreat commentary. Is there a way I can contact you directly? I am student who would be grateful for your advice.
Thank you in advance.
Hi Fred,
ReplyDeleteHave you been able to analyze prosper's internal loss estimates at all? (shows up on the bidding screen and as part of the "lenders estimated return" figure on the listing) This is related but different from the estimated gain/loss on a portfolio plan.
I ask for two reasons. First, I built my portfolio entirely based on that figure. Second, I've noticed many of the "featured borrowers" of late have negative expected returns, even at the starting interest rate, which is somewhat amusing, until you realize that people continue to bid on those loans.
Thanks,
-a