Investment Research on Upstart
Generation Z Investment Club is an intercollegiate student-run investment community that seeks to inspire the next generation of leading investors by equipping members with the right mindset and knowledge for a life-long investor journey.
We run two programs - the Next Gen ESG Investing Program and Gen Z Investing Program. Our members form teams and run their own endowment portfolios.
Another of our team researched on $Upstart (UPST.US)$ and our summary of the company is as follows:
- The lack of credit availabililty for good borrowers, good information and verification process of their creditworthiness.
- The business centres around closing this gap with data algorithms utilising vast amount of borrower data with a proven record of increasing loan approvals and reducing defaults.
We believe that the large and meaningful data moat can only improve over time and there is massive opportunity in this under-penetrated market. As Upstart navigates from personal loan into the auto loan and mortgage loan space, revenues will soar.
However, we do note that there are certain risks involved namely their concentration risks. Upstart derives 58% of their revenue through Cross River Bank and are also heavily reliant on Credit Karma for referrals. Upstart needs to open up new revenue streams and reduce dependence on a few companies to improve their risk rating.
- The lack of credit availabililty for good borrowers, good information and verification process of their creditworthiness.
- The business centres around closing this gap with data algorithms utilising vast amount of borrower data with a proven record of increasing loan approvals and reducing defaults.
We believe that the large and meaningful data moat can only improve over time and there is massive opportunity in this under-penetrated market. As Upstart navigates from personal loan into the auto loan and mortgage loan space, revenues will soar.
However, we do note that there are certain risks involved namely their concentration risks. Upstart derives 58% of their revenue through Cross River Bank and are also heavily reliant on Credit Karma for referrals. Upstart needs to open up new revenue streams and reduce dependence on a few companies to improve their risk rating.
For a more detailed read, do see the pdf provided below.
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