Schwab Investment Boosts E-Loan
Don’t write off E-Loan Inc. just yet.
The Internet-based lender, whose stock had fallen 96% from last year’s peak and recently fetched as little as $3 a share, more than doubled Tuesday after it received $40 million in capital from Charles Schwab Corp. (ticker symbol: SCH), the biggest online brokerage, and four other investors.
E-Loan (EELN) was among many battered Internet stocks recently trading in sub-$5 “penny-stock” territory.
But Tuesday on Nasdaq, the shares rocketed $5.28 to $9.34 after the Dublin, Calif.-based company announced the financing and also said it will partner with San Francisco-based Schwab to market each other’s products. E-Loan services will also be available on Schwab’s Web site.
In the financing round announced Tuesday, Schwab paid $10 million for two classes of warrants convertible into 13.1 million E-Loan shares. The investors putting up the remaining $30 million were Abbey National, Financial Technology Ventures, Benchmark Capital and Technology Partners.
E-Loan’s stock surge benefited E-Trade Group (EGRP), the No. 2 online brokerage, which bought warrants convertible into 600,000 E-Loan shares for $480,000 in June. DLJdirect (DIR), the seventh-largest Web broker, paid $500,000 for the right to buy 53,996 E-Loan shares.
For E-Loan, which is expected to lose $1.01 a share this year, the stock jump was the second-biggest since its first day of trading June 29, when shares zoomed to $37 from the offering price of $14. The stock peaked at $74.38 in early July.
