Upstart Lends Money It Doesn't Hold. What Does That Do to the Stock in a Downturn?
By newsfeedback@fool.com (Brett Schafer)
Read original article on Motley FoolLending 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.
But what happens if the lending markets freeze during a downturn? The answer could get quite scary. Here's why.
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