Upstart's (UPST -1.64%) stock price has been on a rollercoaster ride over the past year. But, in this video clip from "The Future of Fintech" on Motley Fool Live, recorded on May 19, Fool.com contributor Jason Hall examines the company's recent earnings report and outlines several positive metrics that show steady growth ahead.
Jason Hall: That was the beginning of this crazy bit of most recent volatility. If you look at the surface, it's like great revenue was up 156%. Adjusted income almost tripled. Lowered guidance, which we'll talk a little bit about. Great cash flow, positive business, big growth in originations, and then a couple of things again, the guidance lowered, and then this increasing loans held on the balance sheet. We're going to talk, a little bit about that.
You see here, the stock was basically about even over the prior year, climbed up a giant mountain and then back down until that day of earnings. What exactly happened? Give me just a second here I don't know what I did with my notes, but their CFO was at a Barclays Conference day before yesterday and talked about it.
He contextualized what they did and the market's big panic reaction was, Sanjay Datta said, about $150 million in loans that they normally would've sold against the $4.5 billion in loans that they originated in the quarter. He said that they made the decision to support volume is how he described it by keeping those on the balance sheet and said the management was completely caught off guard by the market's reaction.
Moving forward, he said they're going to accept volume volatility. In other words, they're going to slow down their pace of originations versus risk the market reacting the way it did and to make sure it's very clear that their business model has not changed and is not changing.
I want to share a couple of other slides just briefly from their investor presentation in their Q1 earnings. I think they are just really important to highlight. One of the things that we've talked about is its customer concentration. Its partner concentration to the banks that originate the bulk of its loans. That's still true. It still originates the bulk of its loans to just a couple of banks but sequential growth of banking credit union partners continues.
It added more new partners in the beginning of the year than any other quarter since going public. So that's really positive. You look at its auto lending business. Dealer rooftops means dealer locations. Again, it added more and this number has grown enormously in a year-and-a-half since it really entered the business. It signed a couple of more OEM partnerships. I think VW (VWAGY 0.60%) and Toyota (TM -0.22%) might have been the two newest ones. It continues to grow its business, and it does continue to expand.
