Core Viewpoint - LendingClub is positioned as both the best-performing and lowest-valued fintech in the market, with strong third-quarter earnings and plans for rebranding in the upcoming year [1] Financial Performance - LendingClub reported a 37% growth in originations last quarter, which, while not the fastest in the industry, is characterized by superior quality, generating more revenue and profit per loan compared to peers [3][4] - The company aims for a 20% to 30% annual growth in originations moving forward, indicating minimal deceleration in growth [4] Medium-Term Financial Targets - LendingClub anticipates reaching $18 billion to $22 billion in annual originations, up from a current annualized run rate of $10 billion, and expects bank assets to rise to approximately $20 billion from $11 billion [5] - The company projects an increase in return on equity from 13% to between 18% and 20% over the medium term [6] Growth Strategies - Management expects an incremental $5 billion to $8 billion in personal loan originations, primarily from credit card debt consolidation, which constitutes about 82% of its current borrower base [7][8] - LendingClub plans to enter the $500 billion home improvement market, partnering with Wisetack and acquiring technology from the bankrupt startup Mosaic to facilitate this expansion [10][11] Additional Growth Areas - The company also has a small auto loan business and a secured business lending segment, expecting these combined originations to grow by another $1 billion over the medium term, contributing to a total originations growth target of $8 billion to $12 billion [12] Efficiency and Cost Control - LendingClub aims to increase returns on assets through higher retained loans, expanding net interest margins, and improved loan sale prices as interest rates stabilize [13][14] - The company has built strong cost control measures, expecting operating costs to grow more slowly than revenue, which will further enhance return on equity [15] Valuation and Market Position - If LendingClub achieves its medium-term targets, it could reach $450 million in earnings, with a market cap of $1.85 billion, suggesting the stock is trading at just over four times projected 2028 earnings [17][18] - The company has initiated its first share repurchase program of $100 million to leverage its undervalued stock [18]

Core Insights - Upstart Holdings emphasizes the use of real-time data and AI for credit underwriting, leveraging over 98 million repayment events to enhance model accuracy [1] - The company has observed early signs of rising risk in Q3, leading to tighter approval processes and a decrease in conversion rates from 23.9% to 20.6% [2] - Upstart is refining its calibration tools to reduce conversion volatility by approximately 50%, aiming for a more stable approval pipeline [3] Company Developments - Upstart is diversifying its offerings beyond unsecured personal loans, with growth in auto, home, and small-dollar products supported by advancements in property valuations and AI for document verification [4] - Despite management's confidence in new calibrations, investor concerns about approval volatility persist, compounded by sensitivity to macroeconomic trends like interest rates [5] Peer Comparisons - LendingClub Corporation reported a 37% year-over-year increase in loan originations to $2.6 billion and a 32% rise in revenues to $266.2 million, showcasing strong profitability with a 12.4% return on equity [6] - SoFi Technologies, Inc. achieved record net revenues of $961.6 million in Q3, a 38% increase year-over-year, with adjusted EBITDA rising 49% to $276.9 million and a 35% growth in its member base [7] Market Performance - Upstart's shares have declined by 22% over the past six months, underperforming the broader industry and the S&P 500 [8] - The company's current valuation indicates it is overvalued, with a Price/Sales ratio of 2.95X, aligning with the industry average [10] Earnings Estimates - The full-year 2025 Zacks Consensus Estimate for EPS has been revised upward, while the 2026 estimate has seen downward revisions, though both suggest significant year-over-year increases [11]

Core Insights - Capital One (COF) is facing a challenging credit environment with rising net charge-offs (NCOs) and delinquencies indicating increased pressure on consumer portfolios [1][9] - The company's provisions for credit losses surged 82% year-over-year to $16.5 billion, influenced by the acquisition of Discover Financial [3][9] Credit Metrics - Domestic credit card NCOs increased to 4.77%, up 42 basis points from September, while delinquencies rose 10 basis points to 4.99%, both exceeding pre-pandemic levels [2] - Auto credit trends showed NCOs rising 21 basis points to 1.67%, while delinquencies decreased by 2 basis points to 4.97% [2] Loan Growth and Provisions - Capital One's loans held for investment in domestic credit cards reached $254.2 billion, and the auto book increased to $82.5 billion, providing a slight offset to the rising credit metrics [3] - The increase in provisions reflects the company's growing exposure to consumer stress, particularly in lower-income and subprime segments [4][9] Economic Context - The K-shaped economic recovery is leading to divergent credit performance, with affluent borrowers remaining resilient while lower-income segments face greater financial strain [4] - Inflationary pressures and uneven macroeconomic improvement are expected to continue affecting credit metrics in the near term [4] Competitive Landscape - Capital One's peers, American Express and Synchrony Financial, also reported rising NCO rates, indicating a broader trend in the credit card industry [6][7] - American Express's NCO rate rose to 2.2%, while Synchrony Financial's adjusted NCO rate increased to 5.3% [6][7] Valuation and Earnings Estimates - Capital One shares have increased by 12.1% this year, underperforming the industry's growth of 33.6% [8] - The company trades at a 12-month forward price-to-earnings (P/E) ratio of 10.15X, above the industry average [10] - The Zacks Consensus Estimate indicates earnings growth of 38% for 2025 and 2.7% for 2026, with recent upward revisions for 2025 earnings to $19.26 [11]

Key Takeaways Upstart is broadening its business as auto, home and small-dollar loans reach 12% of originations.UPST saw auto, home and small-dollar volumes rise about 300% year over year in the third quarter.Upstart added seven funding partners and saw strong demand for its oversubscribed securitization.Upstart Holdings (UPST) is leaning more into diversification as it works to broaden its business beyond personal loans. Management highlighted that newer verticals, like auto, home and small-dollar loans, a ...

Key Points Rising credit risk has weighed on fintech stocks like Upstart. The business has demonstrated a number of improvements this year, even as the stock has pulled back. Its AI model appears to be adapting to changes in the credit environment. 10 stocks we like better than Upstart › In many ways, Upstart Holdings (NASDAQ: UPST) has had a banner year. A new artificial intelligence (AI) model has significantly improved conversion rates on loan applications for the AI-powered loan originator. R ...

Debt often gets a bad reputation, but not all debt is created equal. Some types of borrowing can help you build wealth, achieve long-term goals, or increase your earning potential. Other types, though, can strain your finances and make it harder to get ahead. Understanding the distinction between good debt vs. bad debt is crucial for borrowing strategically. Understanding how each works and how to manage them responsibly can help you make more informed financial decisions and stay on track toward your goa ...

Core Insights - Upstart Holdings (UPST) has experienced significant stock volatility, dropping over 41% in the last three months despite reporting strong quarterly results [1][7] - The decline is attributed to broader market trends affecting high-growth fintech companies and concerns over Upstart's conservative lending models [1][11] Financial Performance - In Q3, Upstart reported total revenues of $277 million, a 71% increase year-over-year, and loan originations of approximately $2.9 billion, up 80% [3] - The company's AI-driven credit models adjusted approval rates in response to macroeconomic signals, leading to a decrease in conversion rates from 23.9% in Q2 to 20.6% in Q3 [4][3] Product Diversification - Upstart's newer products, including auto, home equity, and small-dollar loans, contributed nearly 12% of total originations, with auto retail loan activity growing over 70% sequentially [5][8] - Instant approvals for small-dollar loans improved significantly, with funding times reduced to under two minutes for qualified borrowers [8] Funding and Partnerships - The company achieved its best quarter for new bank and credit union partnerships, adding seven partners and reaching an all-time high in available monthly funding [9] - Upstart maintained 100% retention of all private credit partners and completed a successful securitization in September, indicating strong investor interest [9] Market Concerns - Despite operational improvements, there are concerns regarding model volatility and the larger-than-normal loan balance as the company transitions new products [11][12] - The stock remains sensitive to macroeconomic factors, particularly interest rates, which adds volatility beyond the company's fundamentals [13] Valuation and Estimates - Recent estimate revisions show an upward trend for the full-year 2025 EPS but downward revisions for 2026, indicating mixed market sentiment [14] - Upstart shares are currently considered overvalued, trading at a forward Price/Sales (P/S) ratio of 3.11, slightly below the industry average [16] Conclusion - Upstart's recent performance contrasts with its stock decline, highlighting improvements in revenues, profitability, and product expansion [17] - The company presents a promising long-term investment opportunity, but requires steadier macro signals and consistent model calibration for a stronger buy case [18]

Millions of car owners are struggling to make their car payments, particularly those in the subprime category. The share of subprime borrowers — those with a poor or limited credit history and a score between 501 and 600 — who are at least 60 days past due on their auto loans rose to 6.65% in October. This is the highest increase since 1994, according to data released by Fitch Ratings. A new analysis by VantageScore suggests that auto loan delinquencies have evolved from being one of the least risky cons ...

Core Insights - Equifax's Market Pulse report indicates a slight increase in U.S. consumer debt delinquency rates, rising to 1.562% in September 2025 from 1.517% in June 2025 [1] - Total U.S. consumer debt reached $18.03 trillion in September 2025, up from $17.91 trillion in August 2025 [1] - Delinquency rates for newer auto loans are rising, particularly among near-prime and prime borrowers, suggesting economic stress is affecting a broader range of consumers [1] Consumer Debt Trends - Total consumer debt increased by $0.12 trillion from August to September 2025 [1] - Auto loan and lease debt totaled $1.68 trillion in September 2025, reflecting a 1.4% increase year-over-year [1] - Bankcard balances reached $1.08 trillion in September 2025, up 4.0% from September 2024 [1] Delinquency Rates - Delinquency rates for auto loans and bankcards have stabilized, with bankcard delinquencies slightly decreasing to 2.7% [1] - Severe delinquency rates for auto loans peaked at 1.6% in early 2024, while bankcard delinquencies peaked at 3.2% [1] - Student loan delinquencies have leveled off around 18%, with severe delinquency rates rising to 16.32% in September 2025 from 0.79% a year ago [2] Consumer Behavior - Rising costs of car ownership due to high vehicle prices, insurance premiums, and interest rates are shifting consumer behavior towards leasing and longer loan terms [1] - Younger generations are opting for co-branded cards or Buy Now, Pay Later options instead of private label credit cards [2] - The prioritization of student loan repayment may increase as wage garnishment on delinquent loans resumes [2]

Core Viewpoint - Pagaya Technologies Ltd. (PGY) is expected to report strong third-quarter earnings, with revenues projected to increase significantly year-over-year, driven by growth in fee revenues and network volume [2][9]. Financial Performance - In Q2, PGY achieved total revenues and other income of $326 million, marking a 30% year-over-year increase, primarily due to higher fee revenues [2]. - The Zacks Consensus Estimate for Q3 revenues is $339 million, indicating a 31.9% year-over-year improvement [2][7]. - The earnings estimate for the upcoming quarter remains unchanged at 62 cents per share, reflecting a 40.9% growth from the same quarter last year [3][4]. Estimate Revision Trend - The earnings estimates for the current quarter have remained stable over the past 30 days, with no changes noted [4]. - The consensus estimate for network volume is $2.84 billion, which represents a 20.7% increase from the prior year [8]. Growth Strategy - Pagaya's growth strategy includes expanding product offerings, enhancing monetization of existing partnerships, and adding new enterprise lending partners, particularly large U.S. banks and auto captives [9][20]. - The company anticipates total revenues and other income for Q3 to be between $330 million and $350 million [9]. Valuation and Market Performance - PGY shares have outperformed the S&P 500 Index in Q3 but are considered expensive relative to the industry, with a trailing 12-month price/book (P/B) ratio of 4.19X compared to the industry average of 3.35X [13][16]. - While PGY trades at a premium to LendingClub, it is at a discount to LendingTree, which has a P/B of 5.97X [19]. Business Model Resilience - The company has diversified its business model beyond personal loans into auto lending and point-of-sale financing, which helps mitigate cyclical risks [20]. - Pagaya has established a network of over 135 institutional funding partners to support its asset-backed securities, enhancing liquidity and stability [21].