Upstart Lends Money It Doesn't Hold. What Does That Do to the Stock in a Downturn?
The supply chain of loans could be in a crunch during an economic calamity.
Overview
Lending is a tricky business. Interest income from payments may look stellar for years, but if just a small portion of these loan recipients stops paying, profits can be wiped away. A peculiar business in the lending "supply chain" is Upstart Holdings (NASDAQ: UPST).
The pandemic-era stock market darling uses artificial intelligence (AI) to price personal and auto loans before selling them to third parties. It is the middleman that tries to run with an asset-light balance sheet compared to banks, mitigating payback risks.
Details
But what happens if the lending markets freeze during a downturn? The answer could get quite scary. Here's why.
Source
Originally published at www.fool.com.
Related Articles
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Data may be delayed up to 15 minutes. Past performance is not indicative of future results. Consult a licensed financial advisor before making investment decisions.