Key Takeaways
- Happen shares jumped 12% today after third-quarter EPS of $0.50 beat the $0.45 consensus and it raised 2026 guidance.
- A $15.9 million provision benefit supplied about a fifth of pre-tax profit, which flatters the beat.
- Its credit is strong, and SoFi Technologies and Upstart Holdings lean on the same borrowers and loan buyers.
- The raise only carries the beat through, so the next report is the real test.
Happen (HAPN), formerly LendingClub, jumped 12% today after its third-quarter EPS of $0.50 beat Wall Street’s $0.45. It also raised its full-year EPS guidance to $1.87-$1.92 from $1.80-$1.90.
Rivals feel it too. SoFi Technologies (SOFI) chases the same prime borrowers and also marks loans at fair value, and Upstart Holdings (UPST) needs the same loan buyers.
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The beat had some help
Revenue of $263.2 million missed the $272.7 million Wall Street expected. Happen blames fair-value accounting, which since January has moved new loans’ credit costs from the provision into revenue.
Happen says strong credit and that switch produced a $15.9 million provision benefit on loans it still holds at cost, about a fifth of its record $76.8 million pre-tax profit. My read: the benefit shrinks with the old book, which fell to $2.7 billion from $4.3 billion at the end of 2025.
Even so, net income has risen about sixfold in two years.
The credit part is real
Net charge-offs fell to 3.1% in the third quarter, from 3.4% a year earlier, backing up CEO Scott Sanborn’s claim that “we continue to outperform on credit.”
SoFi said this week that its credit held in line with expectations. But it earned about 10% on tangible common equity, against Happen’s 15.8%. With Happen’s guidance assuming a December Fed rate hike, how much will higher rates cut what both lenders’ loans are worth?
Upstart grew second-quarter originations 50%, and banks and investors fund most of its loans. Happen just crossed $10 billion of loans sold through its structured certificates, a sign those buyers are still hungry. Will Upstart’s next report show the same?
Happen earned $1.44 a share over the first nine months, so its fourth-quarter guidance of $0.43-$0.48 lands exactly on the new full-year range, below the $0.50 it just earned.
Still cheap
Happen closed at 1.1x tangible book value last session, below its five-year average of 1.3x. Today’s jump only takes it to about 1.2x.
My take: the provision benefit flatters the quarter, but not by enough to matter at this price. I’d buy it here.
Of course, the next report will show how much profit is left as the provision benefit shrinks.
So what is Happen stock actually worth?
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