No. of Recommendations: 3
Earnings report press release:
https://finance.yahoo.com/news/upstart-announces-f...Earnings Call Transcript:
https://www.fool.com/earnings/call-transcripts/202...10-Q SEC filing of quarterly report:
https://ir.upstart.com/node/8681/htmlThe big news that jolted the stock market is that Upstart secured $2 billion in long term funding for their lending platform, so this will allow them to ramp up the volume of deals.
Other good news mentioned in the transcript:
-Auto retail product approved by Mercedes-Benz and Acura.
-84% of Upstart loans fully automated, 70% on mobile phone.
-Auto retail and refinance AI models are both considered to be calibrated and performing on target.
-First external funding agreement in place for retail auto loans.
-Planning to launch a home equity loan product later this year.
I'm still reading the transcript and haven't read the 10-Q at all yet. As expected Upstart reported big losses and massive contraction in their business this past quarter, though they apparently 'beat expectations' for whatever that's worth.
I'm still hanging onto my shares, and while I don't feel great about the amount of money flowing to management, I still believe the company has huge upside. Of the recently announced news, their securing funding for their platform is extremely important both short and long term, but I'm most excited that they're moving into the home equity line of credit market, which is a good match, and big market.
From the transcript, CEO speaking,
"
I'm also pleased to let you know that we expect to launch a home equity product later this year. This is a great fit for Upstart for a few reasons. First, 95% of HELOCs are financed by banks and credit unions, so it's an asset our lending partners know and value. Kick in [? probably should be 'second' -B], HELOCs naturally serve a very prime consumer, namely homeowners.
We expect Upstart's HELOCs to have annual loss rates less than 1%. And third home equity products tend to be countercyclical to refinance products. We know this because in Q4 2022, HELOC volumes from 32% year on year even while mortgage refinances plummeted. Importantly, there's a lot of opportunity to improve the process of originating HELOCs.
The average HELOC today takes 36 days to fund, while we are aiming for online approval in 10 minutes and funding within five days.
"
That's a pretty radical improvement in funding time, which consumers should love.
