UPST is down today (-7.6% as of writing) as the result of one or more analyst downgrades.
Jefferies analyst John Hecht, who’s previously been bullish on UPST, downgraded the stock to HOLD on valuation.
(potentially behind paywall)
He argues that the company’s outlook is already baked into its stock price, in terms of strong market penetration in both the personal and auto loan categories over the next few years.
Interestingly, he forecasts that UPST’s personal loan business can reach 40% market share by 2025 and its auto loan business can reach 7% in the same time span, in part because entering a new market from scratch is difficult.
The Jefferies downgrade follows BofA’s double-downgrade.
Bashuzi (long UPST)
…down to the price it was two weeks ago.
I’ve effectively doubled my position today because I feel like this board has informed me about UPST more than any analyst could. And to downgrade the stock on some weak-ass archaic VALUATION concerns? Please. We cover this company from every possible angle. I bet Jeffries doesn’t have a guy like Jon Wayne parsing employment ads in Ohio (or whoever did that). Or watching ever Girouard video and finding the nuggets in between the lines.
Usually, I’d be freaking out at such a beating in a stock I own a fair amount of, but these two downgrades without any company-specific concerns is hilarious. Today I tried to catch the falling knife 10 times and wound up with superficial wounds.
And it is my feeling that UPST earnings are going to be exceptional and we’re going to hear about partnerships and new customers that we have no idea about at this point. Exciting.
I don’t think that I have seen the issue of computer generated trading explicitly discussed or mentioned on this board, at least not in the past year. My understanding is that 60-80% of trades on Wall Street are computer generated with similar algorithms that exacerbate ups and downs. Hence how a stock can one week be up and the next week down 10-20 percent without any earnings or material news out.
I say we just follow the numbers which is really the secret sauce of this board - buy the business while the computers trade the stock. UPST will have another outstanding earnings call and the stock will again jump to another plateau. The dip this week is a gift.