HOME IMPROVEMENT LOANS IPO: MAY 2018 MARKET VALUE LOSS: $3.7 BILLION
Cofounded in 2006 by David Zalik, a serial entrepreneur whose businesses have ranged from selling refurbished PCs to real-estate investing and cofounding a bank that failed, GreenSky uses tech to make loans—often at zero interest—for home improvements and repairs. Roofers, plumbers and other contractors with mobile phones are its loan officers. For banks it provides great fee income and offloads a good deal of the upfront credit risk.
Last May, GreenSky went public, raising $955 million. But not long after the IPO, cracks in GreenSky’s business model became apparent. In 2018, GreenSky cut its full-year adjusted earnings guidance from $192 million to $175 million, spooking investors.
Things have gotten worse since, as its lenders, including Cross River, have pulled back. The startup is also dealing with legal trouble over its contractor relationships. GreenSky reached a $160,000 settlement in 2017 with New Jersey’s attorney general to resolve consumer complaints, and it is now facing a similar problem in Alabama. Since its post-IPO peak of $26, GreenSky’s stock has fallen to $7, but Zalik has siphoned out so much that his net worth of $1.6 billion is now larger than the company’s market capitalization.