At today’s price of $97/share, this is a $8b market cap company that has developed an alternative credit rating system based on artificial intelligence that competes with the traditional FICO score and which is, they claim, much more accurate at predicting whether a loan will be repaid. Upstart provides this service to client banks and also has a public-facing website where it provides a quote directly to potential lenders, steering, taking on the loan for approved clients and selling it along to a real bank.
Revenues in the past 4 years:
2021: 841m
2020: 228m
2019: 164m
2018: 96m
So it qualifies as a fast grower by anyone’s standards, and expects Q1 revenues to come in 148% above last year’s Q1 revenue.
Revenue, shrevenue, right? Where are the profits? Voilà:
2021: 135m
2020: 6m
2019: 0m
2018: -12m
So using profits from last year, they are trading at trailing P/E of 48, but if they hit their 2022 revenue projections and keep the same margins, they will be under 30, and if their margins continue to improve, which they should, over the long run), it will be lower.
It certainly qualifies as a falling knife, with a share price that is down by more than 3/4 since its peak less than 5 months ago (ouch - this one is sharp!)
I have a small speculative position more for fun than for profit (although…). For more information, you’re better to have a gander at Saul’s Investing Discussions.
For more information, you’re better to have a gander at Saul’s Investing Discussions.
Regards, DTB
You haven’t been keeping up, have you?
The overlord declared that UPST was not SAAS-y enough and sold his position. And the followers (or many of them) did the same.
For more information, you’re better to have a gander at Saul’s Investing Discussions.
Regards, DTB
You haven’t been keeping up, have you? The overlord declared that UPST was not SAAS-y enough and sold his position. And the followers (or many of them) did the same.
Some did, some didn’t, that’s not the point. The point is that the company has been and continues to be extensively discussed on that board, and anyone interested in learning more about the company could do worse than looking there.
I don’t know anything about them. My concern is that their competitors, I’m assuming we are talking about the big 3 (equifax, experian and transunion) are bigger and have been around long. They won’t take someone smaller intruding on their turf lying down. Either may fight back or buy them out, etc.
My concern is that their competitors, I’m assuming we are talking about the big 3 (equifax, experian and transunion) are bigger and have been around long. They won’t take someone smaller intruding on their turf lying down. Either may fight back or buy them out, etc.
Upstart says that they are so far ahead with their data collection/analysis that the Big 3 won’t be able to catch up. I don’t know how true that it, but it sounds plausible.
My concern is that their competitors, I’m assuming we are talking about the big 3 (equifax, experian and transunion) are bigger and have been around long. They won’t take someone smaller intruding on their turf lying down. Either may fight back or buy them out, etc.
Upstart says that they are so far ahead with their data collection/analysis that the Big 3 won’t be able to catch up. I don’t know how true that it, but it sounds plausible.
In OTHER news, the planned move to digital everything is being cancelled because Kodak plans to fight back, saying their film is a whole bunch better than digital anything…and besides… “We’ve been in business a lot longer than this digital stuff and we’re really big.”
Rob
Rule Breaker Home Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.
The point is that the company has been and continues to be extensively discussed on that board, and anyone interested in learning more about the company could do worse than looking there.
I am not so sure DTB. Some of the “analysis” like 80% CAGR as the de minimus and other talking points, makes me wonder how objective those discussions are. There are better discussions taking place in Twitter and elsewhere. Smart VC’s are posting on this name.
The WSJ has an article this morning that includes the likes of Upstart. It seems that some of the subprime consumer debt targeted by Upstart (and Affirm) are seeing some slightly deteriorating metrics which is driving up interest rates for the debts sourced/facilitated by Upstart etc.
Buyers of bonds backed by subprime car loans or credit cards are demanding the highest premiums over interest-rate benchmarks since mid-2020. Meanwhile, investors have punished shares of some financial-technology companies that helped fuel a recent surge in consumer borrowing, such as Affirm Holdings and Upstart Holdings.