I was writing a rather informative and entertaining post about UPST (you will have to take my word for that). But I fat-fingered the tab (I had 8 opened and they were close together and I hit the ‘x’… sigh.
It was an attempt to assign a reasonable value to the stock. I can’t redo, so summarize for my own reminder. For revenue I took Q3 plus UPST’s Q4 midrange projection and tacked on 10% sequential for Q1 and Q2 and came up with $1.03 billion. Q3 was $57.4M net income and $0.60 EPS. They are forecasting only $49 million net revenue for Q4,and the analysts are at $51M. They are forecasting 12% more revenue but 15% less EPS on 1% more shares. Nah. I am counting on their having fixed the AI to detect fraud. Maybe that is an error. I checked the wave action (very calm), the less than 1/10 alto cumulus cloud cover and the depth of the sky color and decided that Q3,4, 1, 2 revenue will be… $1.07 Billion. I took the adjusted EPS for the same quarters and assumed a bit of leverage and came up with $3.13 EPS. Now the 10-year treasury is yielding 1.018% and that (I claim) is forward looking, what the bond vigilantes will take as “risk free” value of their capital. That’s a 55.5 p/e without risk premium and without some 1/3 margin of safety. But, hey, I’m going with it. That’s $174 a share looking forward 6 months.
I added some more after hours at $104.95.
I recognize the doubts of the “I need to hold the best of the best and can’t be bothered with 6-months from now” crowd. I recognize that the average loan value has dropped. I see that FICA score borrowers will get lower interest rates. I get that you can’t take 6% fees on 5% interest loans. Auto refi loans may not gush in (but I am not counting on them). There may be a recession or stagflation. The income is not recurring. But does anyone think that revenue is going to drop? They haven’t said so. We still think, do we not, that UPST has a win-win-win business and business plan. Is the American consumer going to stop buying on credit? Is credit card debt going to disappear? Are UPST powered loans no longer going to provide beneficial re-fi? Won’t inflation increase (definition?) higher prices, higher wages, higher interest rates, more debt, more need for better loan interest?
One thing bothers me more than any other factor. I am buying at sub-$105 price. Where are the UPST insiders? When OKE offered a once-in-a-lifetime bargain, sub-$20, their CFO had the wallet out for some low $millions. That gave some confidence. C’mon, Dave, Sanjay. You got my back??? You could put your money where mine is. You can be amazed same as me with your FY22.