Open Lending

Open Lending sells one product: a cloud-based platform (LPP — Lender Protection Program) that helps credit unions, regional banks and captive auto-finance companies underwrite near-prime auto loans more profitably. The LPP scores the borrower, prices the credit-default insurance, and the originator can lend to a customer that would otherwise be rejected. Open Lending takes a fee per loan funded.

The business was a darling 2020 SPAC IPO. Then near-prime auto loans started going bad in 2023 to 2024 (used car prices fell, repayments deteriorated, charge-offs rose), and Open Lending's volume collapsed. The market took the stock from $30 to under $2. Forward P/E 10.9 on consensus $0.17 forward EPS implies a recovery to roughly $80M EBITDA — credible but not certain.

Founders Sandy Watkins and Ross Jessup hold ~10 percent combined. No major hedge fund 13F whale. Adams Street Partners and SVB Capital (legacy pre-SPAC PE) have largely exited. Insider buying was minimal in 2024.

At 1.85 USD with negative trailing EPS, the trailing P/E is meaningless. Forward P/E 10.9 prices in modest recovery. P/B 2.9 and P/S 2.5 reflect the SaaS-multiple premium that has not fully compressed. EV/EBITDA 26 is high — the market gives credit for the asset-light model but discounts on near-term volume.

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Open Lending is a high-beta credit-cycle play, not a value stock. The thesis only works if US near-prime auto credit normalizes in 2026 to 2027. If it does not, the stock could go to zero through dilution or restructuring. I size this as a 0.3 to 0.5 percent speculative position in a cyclical-recovery basket — money I can afford to lose. The upside scenario is 200 percent over 24 months; the downside scenario is total loss. Not a core holding.