A new UPST loan securitization

KBRA assigns preliminary ratings to three classes of notes issued by Upstart Securitization Trust 2023-1 (“UPST 2023-1”), a $192.708 million consumer loan ABS. The preliminary rating reflects initial credit enhancement level of 43.00% for the Class A notes, 33.50% for the Class B notes and 20.50% for the Class C notes.

They had $700 million of loans on their books at end of Q3 and $623 million at Q2. So this could have significant impact on the balance sheet and is certainly positive for UPST stock. If KBRA is releasing this preliminary rating then the news must have been public for some time. But UPST did not issue a press release, as far as I can tell.



Another UPST thing surfaced in an 8-K yesterday.

On January 31, 2023, in response to the challenging macro environment where many lenders and credit investors have significantly reduced or paused loan originations, Upstart […] implemented a plan of reorganization (the “January 2023 Plan”). The January 2023 Plan is designed to reduce operating costs, streamline operations and return Upstart to profitability. The January 2023 Plan involves a reduction of Upstart’s current workforce by approximately 20%, or approximately 365 employees.

Upstart also plans to suspend development of its small business loan product until macroeconomic conditions improve.

Looks like they’ll initially incur around $15 million in charges, primarily in Q1, and then expect to realize savings of around $57 million in operating expenses over the next 12 months. The charges will be excluded from adjusted EBITDA and adjusted net income.

Naturally, the stock reacted in typical UPST fashion by crashing -0.43%.