One day after watching its stock take off following a $40 million cash infusion, E-Loan shares came back to reality Wednesday when Goldman Sachs downgraded the online lending company.
E-Loan (Nasdaq: EELN) shares tumbled 2 3/16, or 23 percent, to 7 5/32 after Goldman Sachs cut the stock from a "market outperform" rating to "market perform."
On Tuesday, E-Loan shares went on a rampage after announcing that The Charles Schwab Corp., Abbey National, FT Ventures, Benchmark Capital and Technology Partners agreed to acquire equity stakes in the company for a total of $40 million in cash.
E-Loan officials said the proceeds will be used for working capital and general corporate purposes.
"Attracting investments from these financial institutions and venture capital firms is a strong validation of our business model, market opportunity, and category leadership," said CEO Chris Larsen in a company statement. "This financing is a milestone on our path to profitability and will help accelerate E-Loan's penetration into the consumer lending markets."
Of the $40 million raised, Charles Schwab Corp., Abbey National, and FT Ventures contributed $10 million each. Benchmark Capital and Technology Partners contributed $5 million each.
Last quarter, E-Loan posted a loss of $11.8 million, or 28 cents a share, on sales of $7.7 million.
First Call Corp. consensus predicts it will post a loss of 29 cents a share in its first quarter and $1.01 a share in the fiscal year.
This stock hit a 52-week high of 74 3/8 in July before plummeting to a low of 3 earlier this month.
Eight of the 13 analysts following the stock maintain either a "hold" or "sell" recommendation.