I believe the thesis now changed.
This premise hits on a very important difference between this board and TMF philosophy–a difference that I’ve been struggling with. There was a great post on UPST’s premium board about how if you look at the LONG TERM charts of just about every growth stock in tech (subject to survivor bias, sure), you’ll see big drops. ‘Wow, it was trending up, and now it’s trending down.’ It grew faster when it was smaller. It’ll come back as it continues to execute. Is this a surprise to anyone? Or is it just not how the folks on this board prioritize their metrics when selecting stocks? Importantly, the thesis here isn’t uniform, it’s Motley. I’ll come back to this main point in a second.
We invested in UPST because we expect its fee revenue keeps hypergrowth, which turns out to be false
False is a very strong word. I think we need to be checking the seasonality of lending and auto loans, employee shortages, persistent supply chain issues, and the of the overall Covid pandemic situation first.
and based on the conference call they expect it to be lumpy in the future at best.
Wait, what? Why is “lumpy” bad? As above, what tech growth company ISN’T lumpy and volatile? I did not at all invest in UPST because I expected the consistent hypergrowth the company has “failed” to deliver. I invested because I trust leadership to steer the company on a generally market-beating, category-crushing upward arc of success over the next 3-5 years by expanding its parner base and product offerings beyond just 30 or so lenders and personal+auto loans–a potential TAM explosion already well-documented here. Which gets me back to my main point:
Saul Board investors succeed because they make short term decisions well. Lazier TMF members, like me, historically, succeed because they make long term decisions well. Not to go false-binary, but blending the two approaches recently has been a challenge for me. My transition into smaller-company SaaS investing, which clearly takes a bit more attention and diligence and for which this is clearly the best reading space, is barely even a year old. Maybe it’s just a little bit of growing pains, but I’m using my experience to call on others new here to take note of the difference between official TMF guidance/philosophy and what makes this board’s investors happier and wealthier.
Finally, I really appreciate it when posters who sell on quarterly news (I don’t think of it as “panic-selling”, just short-term investing) tell us where the money is going, like Pavlos did. Individuals’ answers to the question of “if not this, what?” (and vice versa, for adds) is good color, even if every investor is making and owning our decisions (or at least, should be). For my part in this regard, I added similar dollar amounts to UPST both before and after the big drop (prices: ~$332 and $253), using cash sourced from another SHOP trim last week. Because I’m taking the long-term view on this one, as I do almost all of my investments. Thank you for reading this far and for making and keeping this the best board at the Fool.
-n8 (all stock holdings at profile, including older and more conservative non-Saulish ones)