In another interview today, Upstart CEO Dave Girouard tells IBD’s Alissa Coram the details behind the fast-growing company’s expectations for Q4 and beyond.
It was interesting that Girouard provided further insight about how UPST will be working on home mortgages during 2022, and that it will be sometime beyond 2022 before he expects to bring UPST’s home mortgage product to market.
Thank you for the link to a nice timely video which has helped sharpen my understanding of the Q3 conference call.
A few notable highlights:
Auto lending expected to be a big driver of growth in 2022
Small business lending available through bank partners in 2022
Micro loans through bank partners I think also will be available in 2022
The interviewer points out that this could help serve people who are coming off of stimulus checks
Home lending will be later.
My Thoughts on what this means for Upstart:
I continue to come away impressed with the speed of innovation. Their products are positive for both the lender and the borrower. The growth prospects appear almost limitless as there is little competition, their models have already proved to provide a better product in personal loans which is giving them legitimacy in the lending world. Partnering with banks and credit unions I assume starts slow and then snowballs as these risk averse organizations are not in a hurry to be the first to try something. But once they see dozen of partners that sheepishness may go away and then it just comes down to the numbers, and here Upstart can make a clear numbers based argument that they can positively impact the banks bottom line.
As Upstart gets more partners it may make it easier and easier for other banks to decide to partner. As Upstart develops more lending products (looks like 4 or so will be on line by 2022) the addition of each new partner provides more revenue potential. Also, once partnered Upstart can roll out new products to their existing partners with more ease than it took for their first product. Add in the tailwind of less direct stimulus checks, all the gears appear greased for incredible growth. The growth at each quarter may be “lumpy” but if we continue to get QoQ growth between 17% and 60% this company will very likely be growing revenues at well over 100% for 2022.
Long Upstart now ~30%, I increased my numbers of shares by about 40% in after hours because while I was disappointed with the growth in that specific quarter I think I see the case for their future growth more clearly. Good luck to all and thank you to everyone that keeps this board high quality!
My notes from the interview:
- CEO is focused on the company strategy and execution of the strategy (not the price of the stock). One of the MF principals that I look for is for the company leadership to run the company based on their strategy and not focused on the stock price. Market will reward the company for execution.
- the emphasis on the partnership with the banks (CEO could not have emphasized the importance of this any more). So based on this I will be tracking the bank partnerships more closely.
- I don’t believe revenue from micro loans and small business loans will be material in 2022.
- this is still a mission driven company
Had 10% allocation before and still holding it (although it’s not 10% anymore)