I’ve gotten quite a few messages asking my thoughts on UPST. Rather than respond individually, I thought I’d post my blink to the board:
I thought it was a great quarter. It certainly answered most of the questions raised after Q3. I was impressed by the loan total and the auto guide even though I’m not crazy about the continuing decline in average loan amount. Conversions, automated approvals, and contribution margin are all back on track. Those developments and the FY guide give me a lot of comfort this will be a winning company in the long run.
However, given its complexity I was determined to wait for the call rather than chase the afterhours jump. And I must admit that complexity gives me some pause. One of things I love here is the deeper we dig on most companies, the easier they become to understand. This could just be me, but I’ve felt the exact opposite recently with UPST. Each new thread only seems to make it more complicated rather than less. Fraud, delinquencies, interest rates, banking regulations, macro…it’s enough to make my head spin. Being 100% honest, I’d consider UPST the business I understand the least of those we discuss (especially in relation to the volume of posts about it). That doesn’t mean others don’t understand it, and more importantly doesn’t mean others should or shouldn’t own it. Frankly, that’s none of my business.
And that leads me to my second UPST observation. Over the years, I’ve found posts here generally fall into one of three categories:
Outlining company variables and performance (which is relevant to just about everyone).
The thought process for putting those pieces of information together (which is relevant only to those who find it useful).
The buy/sell/hold decision (which is ultimately only relevant to the person making it).
The board works best when focused on #1 and #2. Drifting too far toward encouraging, advocating, or defending a particular #3 is when we seem to go astray. It’s not only a very fine line, but one that’s super easy to cross even if unintentional. When that’s happened in the past, it’s created battleground stocks like <grimace> TSLA or <gulp> FSLY. I’d say I fear UPST is headed in that direction but there’s a good chance we’re already there. I honestly don’t care what anyone does with UPST, and no one should care what I do with it either. This is a place for sharing ideas, not telling people what to do. To each his/her own in that regard. We’re all adults, after all (except maybe Spencer Skates according to my Twitter feed ).
After digesting it all, I’ve moved UPST to the top of my watch list but ultimately don’t think UPST in this range is intriguing enough to bump CRWD from my portfolio with CRWD’s report just a couple weeks away. But ask me again in a couple weeks…