Am I making another mistake on UPST? Auto securitizations

From an online post out in the info-ether:

Upstart announced two application extensions for its Auto Retail Platform: Digital Financing & Online Searches. With these two products now available in a fully digital format, Upstart can offer dealers across the country an end-to-end digital car buying application process. While that sounds like table stakes (because it is in other sectors), it’s actually something that does not exist today without several manual controls and paperwork frustrating customers, lowering conversion & fostering time delays."

UPST is making improvements to their auto retailing software platform. The stock is up significantly from the lows. But, what bothers me, is that I still do not find any auto loan securitizations. I received an email from KBRA in which they gave preliminary rating to$140 million of subprime used auto loans. Not a huge amount, but it is something. They announced ratings on two other company’s auto loan securitizations in the last quarter. UPST? Nada. Are lenders holding on to the loans? Are they being sold outside of securitization channels? Is UPST building up the balance sheet some more?

I am down to 1.7% position compared to my target of 5%. No real FOMO at the moment. Earnings on 2/14. So far, UPST is up 50% from 12/28 low. I have spent a year being on the wrong side of every UPST price move.

I need to check out making polls. By 2/28 will UPST go below $14.50 (analysts’ average target), $12.50 ( my sold put strike price), $18.50 (current), won’t go any lower, this is short term bottom.


[poll type=multiple results=always min=1 max=2 chartType=bar]

How low will UPST stock price go between now and 2/28/2023?

  • Won’t go below $18.50. This is short term bottom
  • Below $14.50 (current analysts’ average target)
  • Below $12.50 (my 2/17 sold put strike price)

Well, the poll disappeared. You hit the gear icon and select poll, which I did, and write the questions, but I did something wrong. Who cares, anyway.


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Here’s ya poll, slighly modified:

How low will UPST stock price go between now and 2/28/2023?
  • :rocket::rocket: Won’t go below $18.50. This is short term bottom
  • :baby_chick::baby_chick: Below $18.50 (current)
  • :face_with_monocle::chart_with_downwards_trend: Below $14.50 (current analysts’ average target)
  • :gem: :fist: Below $12.50 (my 2/17 sold put strike price)
  • Oh! A poll! I just wanna vote

0 voters

(Earnings due 2/14/2023 AMC)

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I concur!

I am not certain UPST will retrace to 52 wk low, since the low was so…low. I do think they will have another bad ER or two, but at some point that is baked in. Auto may underwhelm because of macro, and not their loan product.

I would buy (again) anywhere near the 52 wk low.
But, yeah, it could go lower.



I hope so!
I have been short since last Thursday and it doesn´t look too good: -13,88%.
It doesn´t hurt yet though.

An advisor I follow said this, this week. “Shares of both Upstart and of Affirm have been part of a hedge fund trade as a means of investing/speculating on the trend in interest rates. It is a very crowded trade, and thus at the first sign that a pillar of the concept is under question, short covering ensues. That will likely continue to happen.”

And the week before he wrote with a little more detail: " Upstart and Affirm which rose by 30% and 42% respectively. One of the better hedge fund strategies of recent months has been to short the shares of these companies, often hedged against interest rate futures. It has been a very successful strategy, but has become a crowded trade. Once expectations for future interest rate increases started to moderate, the trade needed to be reversed, and the shares of both of these companies rose substantially from oversold conditions. Of course these very large percentage gains are in the context of very low share prices. "

Those unknown unknowns can grab you. You may have shorted that which the big hedge funds are “un-shorting”. Next week the short trade may be back on. Dang! It is not about UPST, it is about the derivative effect of the common knowledge regarding the future actions of the Fed.



Phenomenal point.
As it is with most of the high growth stocks including big cap tech and Saul’s SaaS! It’s not about the companies! How else would anyone logically explain why a company growing 70% a year+ ago is worth 75% less a year later when its still growing 50-60%.

Follow. the. money.

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Short squeeze on a high volume, I saw that on Monday.
But yesterday it was not that bad and MSFT´s weak outlook might be a good omen.
The futures are in the red for the moment, so I´ll wait and see for the rest of the week.

Another notice from KBRA.

“FCAT 2023-1 will issue five classes of notes (seven tranches) totaling $447.04 million, collateralized by a pool of auto loan contracts originated on (1) an indirect basis mainly through franchise auto dealers and (2) a direct basis from online aggregators and other fulfillment partners. The transaction has initial hard credit enhancement levels of 37.15% for the Class A Notes through 2.75% for the Class E Notes.”

It is not at all clear if these are new car auto dealers, or Jimmy’s Lemons Used Car Emporiums. Nor do I know what online aggregators and fulfillment partners are. But seems similar to Upstart’s channels. Or, is Upstart keeping all auto loans on the books to improve the AI learning.?