UPST and PGY are both early players in the game. Both companies are affected by the high proportion of personal loans in their revenue, resulting in significant revenue fluctuations. However, PGY has the advantage of collaborating with institutional investors, which helps reduce the volatility of their revenue compared to UPST.
Both companies are clearly affected by the economic cycle, so to mitigate the volatility, they are expanding into other areas of products. The future revenue volatility may not be as drastic as during this current period of tightening.
From my perspective, looking at the next few years, it is inevitable that interest rate policies will be relaxed, and the companies do not face bankruptcy risks. The current valuation is highly attractive compared to the projected growth rate for next year. Therefore, I am willing to allocate a portion of my portfolio to these cyclical companies.
Regarding Samsara, I believe it is a good company, but the current price is not reasonable. I used to think that valuation was not important, but now I try to find companies that have reasonable valuations and are great. I can allocate a very low proportion of my portfolio to a company when its valuation is expensive for observation purposes.
However, I try to avoid allocating a significantly high proportion when I consider the valuation to be expensive, unless I have very clear reasons telling me that the current valuation is a temporary issue (SNOW, NET, UPST).