Rocket company ( RKT), a comparison to UPST
$Upstart (UPST.US)$ really needs some insightful idea about these two companies. RKT is doing the same thing, personal loans and auto, and more, they do home mortgage too. RKT is very profitable, PE 6.02, EPS 2.81 based on yahoofinance. The skyhigh value of USPT is based on what?PE of 346.26, EPS of 0.92. An online platform which every company is having it. So- called algorithm is something nobody knows but good reason to push up the stock price. The high growth is based on a very low starting point. Would so appreciate anybody to share some reasons which say the intrinsic value is supported by the stock price. Something to say it is not a highly manipulated stock.
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Bobi2206 : UPST operates a marketplace platform. It doesn’t take credit risk (<2% and that’s really for training it’s AI underwriting model more than anything else) so it’s highly scalable and benefits from network effect. Part of RKT’s business is more asset driven in terms of the loans and mortgages it retains on its books. Therein lies the difference. Regardless I believe RKT is a company with fantastic fundamentals too
70163959 OP : I worked as a loan officer in a smaller company. We generated the loan, take the commission and sold the loan the next day. From what I know even big banks sold most of their loans to the secondary market, the investors. Their money is not going to Be stuck in those loans. Instead they make money on commission. But appreciate your response.
70163959 OP : Their income statement shows 100% from commissions and fees. This asset driven Thing is something I don’t get it.
70163959 OP : Actually we do The underwriting thing to make sure the loan we generated Is met the guideline and is able to be sold to the investors. Otherwise we won’t do the loan. There is no credit risk at all.
71075665 : RKT has good fundamentals but lacks substance. They’re a small fish in a big pond.