OnDeck (NYSE:ONDK) announced it was being acquired by Enova yesterday. The news of the acquisition should not have come as much of a surprise as rumors have been circulating for some time now. In May, Crowdfund Insider reported on these rumblings while referencing previous comments by OnDeck CEO Noah Breslow who had stated earlier in the year that the company was working with their board to “explore all options to maximize shareholder value.”
The news of the acquisition was joined by a relatively positive earnings report by OnDeck.
OnDeck is being acquired by Enova (NYSE:ENVA) for $1.38 a share including $0.12 in cash. This pegged the notional value of the company at around $90 million.
In after-hours trading, shares in OnDeck rose on the news. Today, OnDeck shares are holding this gain and are currently trading near the $1.38 amount thus representing more than a 50% gain from yesterday’s close. Correspondingly, shares in Enova were down only slightly.
While OnDeck investors may be relieved that something is more than zero, it has been a long slide down that was accelerated by the Coronavirus. The Fintech was once valued in the billions.
At the beginning of 2020, shares in OnDeck traded above $4.00. COVID hit and shares dropped to under a dollar.
But a long time ago in 2014, OnDeck went public ar $10 a share. At one point, OnDeck traded above $20/share representing the hope and aspirations of the nascent online lending industry to supplant old finance with better, cheaper, and more user-friendly platforms to supply credit to SMEs. Today, that thesis has dimmed, competition has increased, and some lending Fintechs have worked hard to add more services in a long march to profitability.
OnDeck in many ways is emblematic of the rise, struggle, and a bit of a fall, for a sector of Fintech that still holds much promise. But the realities of competition and the need to rapidly iterate mean nothing can be taken for granted. Hopefully, the combination of Enova and OnDeck can generate a better outcome for investors.
