Upstart (UPST 0.82%) has been one of the biggest IPO success stories in recent memory, with the stock up more than 15-fold since going public less than 10 months ago. In this Fool Live video clip, recorded on Sept. 20, contributors Matt Frankel, CFP, and Jason Hall discuss Upstart's biggest growth opportunity and a couple of important risk factors investors should keep in mind. 

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Matt Frankel: Yeah, the auto loan industry is just such an untapped because as you mentioned, the subprime auto loan market is very predatory. It's not uncommon for a subprime borrower to get an interest rate of 20% or more on secured loans.

Jason Hall: On secured assets. On secured loans.

Frankel: Right now, Upstart's prioritizing auto loan refinance to try to get some of these borrowers into more down to earth interest rates. Something like 80% of borrowers have never defaulted on a loan, but less than 50% can qualify for most banks best interest rates. That's a big gap there, and really just creates an opportunity. There's $1.3 trillion of existing auto debt and about $0.5 trillion that is originated each year. And a good bit of that is subprime, borrowers that can't qualify for the top credit scores.

If Upstart can do that better, the lending volumes you are seeing through the platform now are mostly personal loans at this point. Auto lending is still a very small piece of the pie. Even though they really are launching into it to a headfirst is still just ramping up. That could go up a lot from here. But as you mentioned, the valuation is getting lofty at this point. I think it's IPOed in December, IPO price was $20. It's now trading for just shy of $300.

Hall: Yeah. It's about a $23 billion business at this point, which you find a lot of people often do.

Frankel: I wish I would've gotten in on the IPO.

Hall: Yeah.

Frankel: But it's pricing a lot of future growth at this point, which I can understand that I can make the case for it, not be quite my number one.

Hall: Two quick points before we hit our last one so we will have plenty of time to hit some of these individual rankings that we want to talk about. I think it's worth pointing out that when it comes to how good the platform really is, how good their technology is at rating risk.

We're not going to know until the next economic cycle. We're in the middle of a strong economic recovery, strong jobs market. There's more jobs open than there are people looking for jobs that are unemployed. Until we have really a squeeze that we go into some recessionary period, I think it's going to be tough to really evaluate how good are they are originating, how good is their AI at really identifying risks? Remember, you're betting on that, everybody's riding loans right now and nobody's defaulting on them. We don't really completely know that. I think that's the number one thing you have to remember.

Number two is what they are doing that they're calling proprietary, is it really going to prove our proprietary? Because I promise you, there is a lot of dogs in this fight that are seeing what they are doing that are saying, "Okay, we got to act." I think we're going to find out what the competitive nature and the value of their IP is.