Upstart auto loan news and BCU partnership

Two news items on Upstart just hit my radar.

First is that the BCU credit union has just partnered with UPST. BCU is “one of the nation’s Top 100 credit unions serving over 300,000 members in the US and Puerto Rico”. BCU has also been named to the annual Forbes list of Best-In-State Credit Unions, ranking #1 in Illinois and #5 in Minnesota for 2020.

“As an Upstart lending partner since June 2021, BCU will be part of the Upstart Referral Network. With the Upstart Referral Network, qualified personal loan applicants on who meet BCU’s credit policies receive tailored offers as they seamlessly transition into a BCU-branded experience to complete the online member application and closing process.”

The above was announced at UPST’s investor relations microsite at…

Also, the VP of Investor Relations, Jason Schmidt, confirmed in an email today that “7 banks have signed up for auto loans when they launch”. Note that no revenue from auto loans have been included in their forward guidance for 2022. However, that revenue could potentially exceed $500M, according to this tweet:…

For me, personally, I never let my UPST allocation exceed 10% of my portfolio, and as I said here immediately after their earnings, I’m quite comfortable holding at this level. We are at an inflexion point in the S curve of AI-driven lending, and this will play out over multiple years.



Maybe I’m missing it… Where does it say revenue could exceed 500M?

For FY2021, they will likely clock around 850M. If they get 500M or MORE in Auto next year, they don’t need much more acceleration from other products (likely mostly personal lending), in order to continue growing at TRIPLE digit rates!


Just to be clear, I was trying to tamp down revenue expectations from what the auto loan segment could bring in next year. All we know for sure is that 7 banks have signed up for auto loans when they launch. And they haven’t launched yet.

The person whose tweet I quoted said that auto loans could push Upstart’s revenue from $1.14B to $2B, which is actually much more than an incremental $500M. I personally am skeptical that it’s going to be that much next year. Let’s be careful about making investing decisions based on a wildly optimistic statement like this. But I’m comfortable holding my shares at this level because, as I said, AI-based lending is just getting started on the S curve of adoption, and Upstart is the leader in this space.