Oportun Financial: A Possible Turnaround Priced For Disaster, Speculative Buy

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Oportun is a financial services company offering competitive personal lending products and savings services through its award-winning platform. The company is significantly undervalued.OPRT management...

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The company is significantly undervalued.OPRT management...</p>\n\n<a href=\"https://seekingalpha.com/article/4731358-oportun-financial-stock-possible-turnaround-priced-for-disaster-speculative-buy\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Oportun Financial: A Possible Turnaround Priced For Disaster, Speculative Buy</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nOportun Financial: A Possible Turnaround Priced For Disaster, Speculative Buy\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-10-31 18:27 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4731358-oportun-financial-stock-possible-turnaround-priced-for-disaster-speculative-buy><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Oportun is a financial services company offering competitive personal lending products and savings services through its award-winning platform. The company is significantly undervalued.OPRT management...</p>\n\n<a href=\"https://seekingalpha.com/article/4731358-oportun-financial-stock-possible-turnaround-priced-for-disaster-speculative-buy\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4166","symbol_name":"消费信贷","start_time":0,"source_url":"https://seekingalpha.com/article/4731358-oportun-financial-stock-possible-turnaround-priced-for-disaster-speculative-buy","article_id":"2479508891","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1179667626/image_1179667626.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2479508891","pubTimestamp":1730370452,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Oportun is a financial services company offering competitive personal lending products and savings services through its award-winning platform. The company is significantly undervalued.OPRT management","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4166":"消费信贷","OPRT":"Oportun Financial Corp"},"translate_title":"Oportun Financial：为灾难定价的可能扭亏为盈，投机性买入","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"OPRT":0.9},"content_text":"Oportun is a financial services company offering competitive personal lending products and savings services through its award-winning platform. The company is significantly undervalued.OPRT management attempts a turnaround, expecting fundamental improvements.Macro/market tailwinds due to the Fed rate policy pivot may boost Oportun's financial performance.There are certain risks that investors should take into account before making a move.   courtneyk/iStock via Getty Images  Thesis Oportun Financial Corporation (NASDAQ:OPRT) is a financial services company offering personal lending and savings services, mainly targeting people with thin or no credit files, underserved by the traditional banking system. The company is trying to escape from a difficult period by benefiting from a favourable change in the Fed rate policy. Its significant undervaluation and fundamental improvements may trigger a stock rally providing the company reaches, sustains and increases profitability in the coming quarters and the management regains trust, however, there are certain risks and the buy rating is speculative. Oportun 08/2024 Investor Presentation A Brief Company Overview Oportun Financial Corporation is a US financial services company established in 2005, based in San Carlos, California. The company offers lending, savings, and credit card services using AI technology. Oportun commenced trading on Nasdaq on 09/30/2019 after its IPO, which valued the company at $405M ($15 per share) and resulted in $60.5M of net proceeds. Oportun mainly targets people with thin or no credit files, who are underserved by the traditional banking system. The management claims to be mission-driven, a mission to help millions of people build a healthy financial profile, by adopting a holistic approach to responsible lending and savings targets. There are currently 2 million Oportun members. Oportun's products are:  Unsecured personal loans Secured personal loans Credit cards the Set and Save savings platform  offered through the company's site and mobile application. Personal loan products are also available over the phone or through its 130 retail and 519 partner networks. On 09/25/2024, a definitive agreement was announced and Oportun is expected to complete selling its credit card portfolio in Q4 2024. Unsecured Personal Loans This is an unsecured, instalment, fixed-interest loan product. APR may vary, with a cap of 36%. As of June 30, 2024, the weighted average term and APR at origination were 41 months and 33.5%, respectively; the average loan size was $3,252. Loans do not have prepayment penalties or balloon payments and range in size from $300 to $10,000 with terms of 12 to 54 months. Unsecured personal loans are available in 3 states through state licenses and 38 states through a partnership with Pathward. Secured Personal Loans This is an installment loan product secured by the client's automobile. The secured personal loans range in size from $2,525 to $18,500 with terms ranging from 24 to 64 months. The average loan size is $6,789 for the three months ended June 30, 2024, and the weighted average term and APR at origination were 51 months and 29.9%, respectively. The secured personal loans are currently available in 6 states and the company intends to expand the product to the rest of the US. Set & Save The Set & Save product is the #1 savings app of 2024 topping the Bankrate list. Members can link their bank accounts with the platform and AI is utilized to understand each member's financial habits and future cash flows to help them set and achieve savings goals, providing a tailored solution. A total of $10.8B has been saved since 2015, using Set and Save, resulting in an average of more than $1,800 per member annually. Lending as a Service Oportun is building a partner network to sell loans through its new lending-as-a-service, lead generation program; The company expects reduced lead-to-market time and increased member numbers. Oportun 08/2024 Investor Presentation   The company, having sold its credit card portfolio, will focus on improving and integrating its lending and savings products.   The Personal Lending Ecosystem Millions of Americans often face unexpected expenses. A house or car repair, a health matter, could be hard to afford for many people. According to the \"Economic Well-Being of U.S. Households in 2023\" published on May 2024 by the Federal Reserve, 37% of Americans would be unable to pay an unexpected, $400 expense using cash, savings or other direct payment methods. Such expenses would push many of them to seek alternative ways to pay, and this is when personal loans come to the rescue. In addition, the global small personal loans market is expected to boom in the coming years; according to Allied Market Research report it's expected to grow at 20.1% CAGR by 2032 reaching $158.7B. Oportun 08/2024 Investor Presentation Q2 2024 ER and Important Developments On 08/08/2024 Oportun released a promising ER. The management claims to be turning the tide while also trying to benefit from more favourable macro/market conditions due to the FED rate policy and normalization of personal loan demand. Revenue seems relatively stable while adj. EBITDA and Net Income increased and operating expenses decreased. Operating cash flow exceeded $100M. Oportun Q2 2024 ER Presentation The credit card portfolio sale will be EBITDA accretive while allowing Oportun to focus on its personal lending and savings products. Another important development worth mentioning is the new lending-as-a-service collaboration with Western Union; Oportun will benefit from placing its brand next to the globally known Western Union brand while gaining access to millions of Western Union customers. Oportun Q2 2024 ER Presentation Finally, the company released Q3 and FY 2024 guidance; it is important to at least meet or even better beat expectations and the company managed to do so as will be presented below. Oportun 08/2024 Investor Presentation Q3 2024 Preliminary Results On 10/29/2024 Oportun announced a lower interest rate credit agreement to refinance its existing corporate financing facility with a new $235 million senior secured term loan along with preliminary Q3 2024 results and FY 2025 guidance. The Q3 2024 ER is expected to be in line with the previous guidance in terms of Revenue while delivering guidance beat regarding Annualized Net Charge-Off Rate and Adjusted EBITDA. This is a positive development for the future of the company. Oportun 10/2024 Investor Presentation Moreover, Oportun shared its expectations regarding FY 2025 releasing a confident preliminary guidance. If management delivers and macro/market tailwinds continue, the worse could be back, and more guidance beats could be expected in 2025. Oportun 10/2024 Investor Presentation Valuation Oportun is poorly valued. In fact, some ratios are shockingly lower compared to peers; for instance, while the company currently trades at a market cap of ~$93M, expected FY 2024:  Revenue should be ~$1B, resulting in a ~0.1 P/S ratio (Financials sector median ~3.0 according to Seeking Alpha metrics) Operating cash flow should be ~$400M, resulting in a ~0.26 P/OCF ratio (Financials sector median ~9.62 according to Seeking Alpha metrics)  Its book value currently stands at $354.1M resulting in a ~0.29 P/BV ratio (Financials sector median ~1.23 according to Seeking Alpha metrics) which matters especially if someone values Oportun as a bank and not as a fintech. Even in this case, Oportun should be trading closer to its book value, or at least x3 of its current market cap. Finally, Oportun is expected to reach net profitability in the coming quarters. Improvements in originations, charge-offs, operating expenses, and portfolio yield are expected. Based on the latest guidance, a $18M FY 2025 net income could be achieved and that would result in a ~5.2 forward 2025 P/E ratio. Applying a sector median of ~12.33 would result in a x2.37 of its current market cap valuation. Risks (or, why so cheap?)  Oportun may prove incapable of decreasing expenses, increasing and sustaining profitability, and gaining a larger market share. The market doesn't seem persuaded about that right now. The company will have to compete in a crowded market with strong players. Macro/market conditions may not improve as currently expected. A significant amount of Oportun loans originated through the partnership with Pathward; if a problem occurs regarding this partnership Oportun will be negatively affected. Certain shareholders publicly blamed the management twice (first announcement, second announcement) for dropping the ball and asked for the CEO and board members' resignations. Public disputes don't attract investors and this matter should be resolved sooner rather than later. The company's balance sheet is highly leveraged; existing shareholders could face dilution, especially if management's turnaround efforts fail. Oportun is a microcap company and its stock may present extreme volatility.  Conclusion  Oportun is a company operating in a booming industry, offering an interesting and competitive mix of products, expecting macro/market tailwinds after the FED rate policy pivot. The management attempts a turnaround effort. However, the current market cap clearly shows that the market is not sure it will succeed, despite improvements in recent quarters and positive developments such as the Western Union agreement and the sale of the credit card portfolio. On top of that, certain shareholders publicly shared their despair regarding the company's leadership. On the other hand, the management addressed and seemed to be aware of the main concerns during the Q2 earnings call, expecting improvements in the coming quarters. All things considered, investors who can stomach a certain amount of risk should initiate a position that suits them betting on Oportun's undervaluation and possible turnaround, prior Q3 earnings release, while having in mind that things can go the wrong way.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2479508891"}