Why LendingTree Stock Is Up More Than 16% On Tuesday

As has been the case with most of the biggest daily gains of late, the earnings report for the recently ended quarter gets the credit for LendingTree (NASDAQ: TREE) shares' stellar move today. Specifically, as of 11:38 a.m. ET Tuesday, TREE stock is higher by 16.7%, boosted by unexpectedly strong fourth-quarter revenue growth that's expected to remain strong through the fiscal year now underway.

Still, it's difficult to ignore the fact that the company's adjusted per-share loss turned negative (when stripping out the benefit of a sizable one-time tax benefit), while at the same time marketing expenses grew faster than revenue.

Optimistic outlook

LendingTree turned $319.7 million worth of revenue into a per-share GAAP profit of $10.27 for the three-month stretch ending in December, beating analysts' expectations for a top line of around $285 million, and improving its year-earlier sales of $261.5 million by 22%. The adjusted/non-GAAP loss of $0.39 per share, however, fell well short of the consensus figure for a profit of $0.87, and fell dramatically from the year-earlier Q4 comparison of a profit of $1.16 per share. Its consumer-facing and insurance businesses did particularly well, although its home-loan business didn't quite meet analysts' expectations.

Image source: Getty Images.

Still, building on the acceleration evident in last quarter's results, LendingTree is optimistic about the year ahead. Management anticipates revenue of between $1.275 billion and $1.33 billion for the entirety of 2026, up 16% at the midpoint of that range, and up more than 9% from analysts' consensus figure of just under $1.2 billion.

Today's jump doesn't negate the risk

Despite the swing back to a non-GAAP loss, today's big jump is understandable based on nothing more than guidance.

Be wary of interpreting today's big move as the beginning of enduring bullishness though. Context matters, with the chief context right now being that LendingTree shares may have been primed to soar on any decent news today, by virtue of reaching a new 52-week low just late last month.

It's also worth mentioning that while President Scott Peyree explained during LendingTree's fourth-quarter earnings conference call that he sees artificial intelligence as more of an opportunity than a threat, this optimism may not fully acknowledge how easily a bigger rival could outspend LendingTree to build similar AI functionality.

It also remains to be seen if the rapid growth of variable marketing spending can actually be curbed as described during the earnings call, after outpacing revenue growth last quarter as well as for all of last year.

TREE might be worth putting on your watchlist here. For most investors though, there's still too much risk to add it to your portfolio just yet.

James Brumley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.