- Upstart Holdings, Inc. reported weak quarterly numbers, with revenues missing analyst estimates by $5 million.
- The company's business model relies too heavily on bank partners for loan origination leading to volatile results.
- The stock only trades at 3x '24 sales targets, which appear conservative based on prior peak levels.
The article discusses Upstart Holdings, Inc. (UPST) and its recent financial performance and prospects. Here's a summary of the key points:
- Upstart reported weak quarterly numbers, with revenues missing analyst estimates by $5 million. The company's revenues dipped 14.4% year-over-year, and loan originations decreased by 34% year-over-year during Q3.
- The company's business model heavily relies on bank partners for originating consumer loans, making it susceptible to economic fluctuations and the quality of loan demand.
- Upstart has been expanding into auto and HELOC (Home Equity Line of Credit) loans while facing challenges in maintaining loan origination volumes, especially during economic downturns.
- Despite efforts to improve efficiency and pricing, Upstart's AI-driven lending model struggles to offset the cyclical nature of the lending business.
- The stock's price slumped in after-hours trading due to weak Q4 guidance, which reflects the ongoing challenges in the consumer loan origination market.
- However, the article suggests that the stock might be setting up for a potential rally in 2024, as the company has expanded its partnerships and market opportunities in auto loans and HELOCs.
