In This Article:
The stock markets have witnessed significant volatility in the past month. Oportun Financial Corporation OPRT, a California-based lending firm, has not been immune to this broader market slump.
In the past month, OPRT shares have tumbled 25.8%, underperforming the Zacks Finance sector and the S&P 500 index. Additionally, the stock has underperformed its close peers — Enova International, Inc. ENVA and Regional Management Corp. RM.
One-Month OPRT Price Performance
Image Source: Zacks Investment Research
The sell-off in the markets has been primarily caused by the announcement of sweeping “reciprocal” tariffs by President Donald Trump, raising concerns of a full-scale trade war. Also, economic data reflect a slowdown in the U.S. economy and inflationary pressure. These factors have resulted in ambiguity and recessionary fears in the market.
Given the uncertain and volatile backdrop, let us see whether OPRT stock is worth investing in now.
Factors Supporting Opportun Stock
Solid Loan Growth to Support Revenues: Opportun’s revenue growth has been impressive over the past few years, driven by solid loan growth and higher interest rates. The company’s total revenues and loans receivable at fair value witnessed a 5-year (ended 2024) compound annual growth rate (CAGR) of 10.8% and 8.1%, respectively.
Revenue Trend
Image Source: Zacks Investment Research
Opportun has been driving loan growth through its diverse offerings, including personal loans, secured personal loans and “lending as a service” partnership programs, to expand its client base and presence in several markets.
Such offerings enable OPRT to generate a higher yield on its loan portfolio to boost interest income. Also, the company has been reducing its customer acquisition costs (CAC) through higher organic growth. As of Dec. 31, 2024, CAC was $125 compared with $161 as of Dec. 31, 2023.
Also, the company has been witnessing rising non-interest income through higher subscriptions and servicing fees. OPRT’s non-interest income reflected a CAGR of 6.4% over the five years ended 2024.
Thus, Opportun’s solid loans receivables at fair value, improving fee income and product diversification efforts will continue to bolster its top-line growth. Though the company’s loan growth is likely to be subdued this year amid inflationary pressures and higher-for-longer rates, the same is likely to improve as recessionary fears fade away.
Sales Estimates
Image Source: Zacks Investment Research
Management expects total revenues to be in the range of $225-$230 million in the first quarter of 2025, down from $250.5 million in the prior-year quarter. Also, the metric is expected to be $945-$970 million in 2025 compared with $1 billion in 2024.
Robust Technology Usage: Opportun has been leveraging technology to boost its underwriting standards and offer personalized customer service. The company uses artificial intelligence (AI), particularly machine learning (ML), to use alternative datasets to assess the credit profiles of its clients. This enables it to provide a score to roughly all its clients, including those who have little to no credit history.
This enables enhanced underwriting, leading to lower default risks, and ensures consistent revenue growth while mitigating costs. Further, the lending database allows OPRT to scale up its operations efficiently with minimal infrastructure investment.
Additionally, OPRT offers the Set & Save product, which helps its clients manage their money by analyzing their obligations and expense routines. Thus, the assimilation of sophisticated technology to address its customers’ needs offers Opportun a competitive edge over its traditional counterparts, who often rely on traditional datasets to provide credit scores. This enables OPRT to grow its market share rapidly and achieve efficiency alongside solid underwriting.
Solid Balance Sheet: As of Dec. 31, 2024, Opportun's cash and cash equivalents (including restricted cash) totaled $214.6 million. It had a debt (including lease liabilities and other liabilities) of $69.1 million as of the same date.
OPRT has diverse sources to fund its loan growth, including cash flows from operations, securitizations, secured borrowings, corporate financing, and structured and whole loan sales.
Thus, a strong liquidity sheet position and diversified funding profile will continue to support the company’s financials.
