UPST

I was writing a rather informative and entertaining post about UPST (you will have to take my word for that). :slight_smile: 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.

KC

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UPST is a heartbreaker but who knows.

I exited glbe yesterday by pure luck.

Down 13% more premarket

They can always go lower or higher than I think is reasonable

Which is why timing does matter, imo

GL!

Dreamer

“where are UPST insiders”?

Not sure if you noticed Paul Gu did another option to stock conversion this month.
He did the same thing in March last year and July last year, both times before the stock ran up… (and he also sold a lot of stock after run up… but that all insiders did)

in case you dont recognize, these options expire not before 2027… and they are at strike <$3… so when he converted something in low $100s, he has to pay regular income tax this year for pretty much whole amount… for the luxury of holding it…

the only reason anyone does this (and it is rare of rare… even more rare than buying in open market), is that the person is very very confident that stock price will be much much higher from here… and that he can hold it for > 1 year so when he actually sells it, he pays long term capital on appreciation from here (from low $100s)

And this guy is their AI genius… enough said!

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Nilvest,

Thanks for that. I didn’t notice.

KC

And this guy is their AI genius… enough said!

Thanks for the post, great info. It sounds like he believes it’s going much higher and has done this before with success. But this sentence leads me to believe the guy is making a dumb move. Maybe I missed something. Not familiar with insiders and their options compensation.

I meant that sentence in a positive way…

he is literally AI genius… which is why he is co-founder and most of technical success of the company is attributed to him…

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