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After its surprising move earlier in 2022 to park excess loans on its balance sheet, artificial intelligence-powered consumer lending platform Upstart (NASDAQ:UPST) has decided not to hold on to those loans, The Wall Street Journal reported.
Moreover, if the demand for loans dwindles, Upstart (UPST) would likely reduce its lending volume instead of parking those loans on its balance sheet, the company's CFO Sanjay Datta said, as reported by The WSJ.
Datta added that Upstart (UPST) continues to hoard loans on its balance sheet in auto lending and other new business lines in an effort to "demonstrate to investors its ability to assess credit risk."
Note the company's lending platform aggregates consumer demand for loans and connects it to its network of AI-enabled bank partners. Upstart (UPST) charges a fee for that service, which is their primary way of generating revenue.
In the first quarter, the company's bank partners originated 465,537 loans, totaling $4.5B across its platform. That compared with 495,205 loans originated in Q4 2021 totaling $4.1B.
Meanwhile, shares of UPST are climbing more than 13% in Thursday afternoon trading amid a broader risk-on day.
Previously, (May 11) Upstart got downgraded to Neutral at Atlantic due to its "increased use of its balance sheet to supplement loan origination."