$GSKY - Solar loans are coming back!

GreenSky has been a troubled stock since the IPO in 2018. The stock debuted at $24 and went up to $26 right after their IPO. Then came an announcement that GreenSky was ending their solar program which started the shareholder lawsuits. Eventually the stock plummeted to a low of $3.90. In July of this year, GreenSky announced they had settled both their shareholder lawsuit and reached a deal with the CFPB as well. The stock is up 51% since these announcements and just hit a new 52-week high of $9.02. In the Q2-21 earnings press release David Zalik stated “Looking ahead, we are excited to announce the launch of a new residential solar program later this year, which will further contribute to our continued strong momentum.” Solar loans according to the latest quarterly earnings only make up about 1% of transaction volume. At the IPO the solar program represented approximately 14% of company transaction volume and the average solar loan transaction fee was over 12% while the average transaction fee for the rest of GreenSky’s home improvement loans was under 7%. Solar loans can be pretty large and with a high transaction fee this could be a major boost to the bottom line. There are some other positives such as 30+ day delinquencies are down to an all time low as a percentage of the loan portfolio. Cost of revenue is down as well, but I don’t know if that’s just a pandemic blip or real long-term improvement. One negative I saw was that GreenSky had revised down some of their 2021 guidance citing “recent challenges in the home improvement supply chain and labor markets.” Now that GreenSky has settled these lawsuits that were hanging over them and by now have probably implemented or at least planned changes outlined in the CFPB consent decree, I think things are really turning around. As always this is not financial advice. Do your own DD. Position 20 - 14 Apr 22 7.5 Calls

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Foulwinde

Sep 14, 2021

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$GSKY - Solar loans are coming back!

bullish

GreenSky has been a troubled stock since the IPO in 2018. The stock debuted at $24 and went up to $26 right after their IPO. Then came an announcement that GreenSky was ending their solar program which started the shareholder lawsuits. Eventually the stock plummeted to a low of $3.90. In July of this year, GreenSky announced they had settled both their shareholder lawsuit and reached a deal with the CFPB as well. The stock is up 51% since these announcements and just hit a new 52-week high of $9.02.

In the Q2-21 earnings press release David Zalik stated “Looking ahead, we are excited to announce the launch of a new residential solar program later this year, which will further contribute to our continued strong momentum.”

Solar loans according to the latest quarterly earnings only make up about 1% of transaction volume. At the IPO the solar program represented approximately 14% of company transaction volume and the average solar loan transaction fee was over 12% while the average transaction fee for the rest of GreenSky’s home improvement loans was under 7%. Solar loans can be pretty large and with a high transaction fee this could be a major boost to the bottom line.

There are some other positives such as 30+ day delinquencies are down to an all time low as a percentage of the loan portfolio. Cost of revenue is down as well, but I don’t know if that’s just a pandemic blip or real long-term improvement.

One negative I saw was that GreenSky had revised down some of their 2021 guidance citing “recent challenges in the home improvement supply chain and labor markets.”

Now that GreenSky has settled these lawsuits that were hanging over them and by now have probably implemented or at least planned changes outlined in the CFPB consent decree, I think things are really turning around.

As always this is not financial advice. Do your own DD.

Position 20 - 14 Apr 22 7.5 Calls

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read-time
1 min

10.00

Target Price

9/ 10

Confidence

6-12 Months

Timeframe
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