I agree. Posting of press releases without more said is not the intended use of the board. And shouldn’t be done.
But I disagree that this is just another customer announcement.
My investment in Upstart is premised on Upstart’s ability to gain hundreds of partnerships over time with expanding services provided to each. Those lenders are the key; as long as they sign on and increase the usage of Upstart’s platform, the company will grow from the current $2.5 billion market cap.
The addition of each partner does a few things to counter the bear thesis that is prevalent in the market right now beyond the macro-environmental predictions of a further slowing of Upstart’s growth.
Each new partner reducesthe dependency on the ABS markets. This is where somewhere between one-half to two-thirds of the loans originated through Upstart end up. So, each partnership not only reduces the loan percentage ending up on the ABS markets, this small credit union now provides 30,000 potential borrowers at no customer acquisition cost to Upstart as Firelands Credit Union’s name is on the application, not Upstart’s.
And to further counter the bear thesis, I see each partnership as a validation by the experts in lending of Upstart’s ratings ability and the value of its platform provides to the thousands of smaller banks and credit unions.
Much of the bear case made about Upstart notes the dependence on the ABS markets, reads into interim bond reports, and declares that Upstart’s models are failing, eroding, or that because they are “new” Upstart isn’t tested in high rate high inflation macro conditions that we are seeing and will inherently fail. Of course, the changes and use and tweaking of FICO ratings as they stand now are likely similarly new. Albeit, Upstart has changed the pool of borrowers so there is a major difference, but I have yet to see any real analysis regarding that increased borrower pool as the framework and reference used to support the bear thesis begins by classifying Upstart borrowers by FICO scores - not by Upstart’s relative ranking system.
And finally, the partnerships announcements lead me to believe that Upstart is doing well, and will do well because each announcement means that people who lend money for a living are signing with Upstart because they believe Upstart provides value to both their customers and their bottom line.
So, yes, Upstart is out of favor on the board and the reasons are well reasoned and well stated. I don’t deny that they may be right, but I think the announcements like these partnerships tend to make Upstart’s future business success more likely to occur than the outcomes predicted by the bear cases.
And yes, Upstart press release posts … without more, shouldn’t be posted on this board.