Investment Review №329. It's time to take a risk

Investment potential

• Company Profile. Lendbuzz Inc. provides auto loans leveraging artificial intelligence and machine learning models to assess credit risk. The evaluation process incorporates credit bureau data alongside alternative information such as bank transactions and vehicle details to profile applicants. The company finances its loans through asset-backed securitizations, traditional bank credit facilities, and the sale of loan portfolios to institutional investors—primarily insurance companies seeking yield. Lendbuzz targets near-prime borrowers and individuals with no credit history, a market segment estimated at 119 million people. As of June 30, 2025, the company maintained partnerships with 2,164 auto dealerships.
• Potential Market. According to the Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit for December 2024, the U.S. auto finance market is exceptionally large, with approximately $704 billion in new auto loans issued annually and a total outstanding auto loan balance of around $1.7 trillion. Auto lending in the U.S. is predominantly point-of-sale driven: 84% of loans are originated through auto dealerships, according to Cox Automotive’s 2019 report. The dealership market is highly fragmented, comprising over 55,000 dealerships nationwide. More than 90% of these dealerships are small, independent local businesses not included in the top 100 dealer groups by total rooftops, based on Automotive News data from 2025. The fragmented nature of the U.S. auto dealership landscape means that building a broad and active dealer network typically requires a time-intensive, street-level sales approach.
• Financials Financial. The company reported revenue growth rates of 73% in 2023, 61% in 2024, and 38% for the first half of 2025. Net profit margin was 6% in 2023, improved to 8% in 2024, and reverted to 6% during the first six months of 2025.