Bert’s actual email quote with his permission regarding the UPST shareholders:
“…It is often that the share price seems to define the analysis rather than the other way around.”
What a beautiful insight! Bert continued:
“…Did someone miss that rather substantial bump in Q4 guidance or that EBITDA doubled the prior forecast. I have a 4 quarter forward estimate of $1.4 billion…”
What on earth were shareholders expecting for UPST? Management has been clear enough all along that serious auto revenue would take until second half 2022, and as 2021 winds down, they can’t bump revenue estimates up to $900M.
In the posted research here, we missed that UPST has not engaged in excessive sandbagging whenever they had sufficient data. I recall in their 12/31/20 annual report released on March 17, while they raised 2021 revenue from $279M to an astounding $500M, their projection for Q1, when the quarter had only 2 weeks to go, was $117M against the actual Q1 of $121M.
2Q report on May 4, and 3Q report on August 10 raised annual revenue to very bullish $600M and $750M, with good but not surprising quarterly beats. So as the year was winding down, i couldn’t see the estimates tossed around here as realistic.
We have a shot at $850M revenue for 2021. How would we have felt about that number in March, when the stock was selling at $105 on projected revenue of $279M for 2021, and $500M for 2022?
I admit, my UPST stake got much too large and i should have trimmed more prior to earnings and I planned to do so until the stock dropped from $400 down to $300, seemingly lowering the bar enough for what i could see was over hype. What I might have missed is the influence of this increasingly important Board, especially when there is such widespread overweighting in one stock, which seemed to drive Twitter and other sites in this case.
In retrospect, perhaps most of us know we were over allocated in a single stock, even given our stated principles for greater concentration than conventional thinking. Seems there were too many of us with too much concentration, which possibly made us more easily subject to fear leading so many to lighten up at the same time. I’m still too concentrated in UPST but intend to hold tight for now, though I’ll trim down to a sensible level over time. My guess is there are more dollars, among pros and retail investors, that would like exposure to this stock than those who wish to sell at this price level.
This company today looks more undervalued to me than it did in February. I feel even more assured than i did in January when i held this little secret UPST stock. Who doesn’t believe this company won’t generate several times more revenue in 5 years than it now does?
Just my take. I’m wrong a lot.
Best to all.