Very simple post on UPST


Using Upstart’s guidance for next Q, last year’s full revenue will come in at 779 million bananas. They will of course beat their guidance, but Monkey is being conservative for obvious reasons.

Current market cap = 11.2 Billion.

That makes their P/S 14.3!!!

Consider that their y/o/y revenue growth is approximately 250%, however unsustainable, but it is what it is.

QoQ growth last quarter was 17.8%…

And guidance is for QoQ 16%…

But also consider: banks are still just starting to sign-up… we are nowhere near the “hundreds” expected…

And auto loan revenue is not included in the projection for next Q…

Which returns Money to the current 14.3 ratio…

Either this is one of the most obvious bets in the entire market right now just sitting there asking whether we have the guts of conviction when others are being irrationally fearful…

Or, the virus is going to wipe its bum with humanity for a third straight year, and economies will collapse, and interest rates will skyrocket, and we’re all doomed and need to seek nuclear-fallout shelters or find the highest perches in the jungle.

Given these current prices in the context of these numbers, Monkey is having a hard time seeing much else besides this binary outcome…

14.6… for a company growing 200+% while just getting started expanding into a trillion-dollar+ market…

Oh yeah, and there was this tweet from the chief suit saying: “We will shock the world again in 2022🚀”

Either he’s playing with humble Monkey’s heart, or he’s a con-artist of the highest order.



Monkey (long UPST)


Thanks monkey!

A company…

  • with revenue $228 million up 250% yoy
  • operating income 28.6 million up 134% yoy
  • net income 57 million up 367% yoy (positive numbers not losses!)
  • and guiding for $265 million (+16% sequentally) which they will probably beat at least by 6%…

and with a current P/s 14 is maybe not an obvious bet, but I want to have a piece of this cake :slight_smile:

Just my two cents from an unexperienced investor who is here to learn from
you guys!


Olocli (long UPST)


Thanks for this post Monkey. This is the most violent drawdown I’ve ever experienced, and I’d be lying if I said I wasn’t starting to worry that I’m overlooking glaring issues with the company.

How much are you factoring in fed policy / other macro changes? I invested solely based on past growth and TAM, while entirely neglecting macro stuff. While a lot of great investors are known for ignoring macro, I wonder if that was a mistake with Upstart.

Either way, I’ll learn a lot with this one, because I’ve generally avoided investing outside my circle of competence even if something was growing fast, but made an exception for Upstart. Long-term it may still prove to be a great decision, but right now…ouch!


While a lot of great investors are known for ignoring macro, I wonder if that was a mistake with Upstart.

It’s natural to wonder how great the other investors are when they’re getting tossed up and down by the same storm you are. Thing is, for the most part investing greatness is not determined by short term results; you don’t know who the great ones are until they’re rich, which in pretty much every case** means they’ve let their high-confidence holdings (boats, I guess) run a LONG time, through a LOT of storms, because they know those boats are built to weather many macro storms and still arrive safely at the destination (decked-out retirement cabin in Fiji, say) unharmed, and most importantly, fast enough that there’s still time to enjoy the benefit. You could put it all in a big freighter, or switch jet skis frequently, or try out a few nice value sailboat sand see how you do, but your armada’s effectiveness shouldn’t be measured by one storm. Invest like the journey is fairly long, because unless you’re either really lucky or really unlucky, it will be.

-n8 (holding UPST near the end of “Year 0.5” out of a planned “3 to 5”, down slightly with it overall so far)
** I think Saul’s is an exception, closer to the jet-ski model of “getting to Fiji as fast as possible”, unless that’s the analogy I should assign to day-trading. Maybe speedboats.



I agree with your post. I’m going to build upon your view and add a bit of my own color based on posts I’ve read from others.

Let’s acknowledge the move in $UPST price has been painful, even unsettling, especially for those that might have a much higher cost basis. It isn’t fun but within the realm of possibilities as high growth is volatile and given the market’s expectations for Q3 ’21, etc. Not to be missed is that the market has sold off high growth names across the board since Nov ’21.

To me, the more recent decline has made the company’s risk/reward trade off increasingly interesting for various reasons including those shared by Monkey. The market is known, at times, to move too far in either direction and each investor has to figure out IF that has occurred and then what to do in that situation for their circumstances.

To Monkey’s point, it feels like it has moved too far into bearish territory. For me, I increased my previously appropriate allocation today.

The PS (backwards looking) stands at approx 18.5x TTM as of Q3 ’21 and should be close to 14x once the full year 2021 is reported. If you’re looking forward, as many do with high growth names, the street is looking at approx 1.145b next year in revenue. At today’s stock price ($139) that’s a forward 1y PS of 10x and feels very reasonable from a historical context. Add that Wall Street is probably under appreciating the growth in 2022 and, if correct, it is poised for a substantial rally at some point in the future.

Brad Gerstner was on CNBC yesterday talking about high growth companies. He said something that many have said here before. Paraphrasing: Sell-side analysts project forward estimates and always trend them down significantly and quickly for ALL companies. They don’t give enough credit to how long the runway really is for CERTAIN companies and hence the high growth rates that these companies will still be experiencing many years from now.

Our job, as investors, is to figure out the length of that runway and which companies those are. Being a software company and having some growth doesn’t make you invaluable to your customers or an innovator. Find those companies that do at scale and hold on. Numbers aren’t everything but certainly a great guide and hence a core tenet of Saul’s method.

Brad said this next quote specifically about $SNOW though I think it applies to all well run and innovative high growth companies. “Our growth expectations for the company are higher for longer than sell-side consensus…”. Hasn’t Saul, and many on this board, essentially said that over and over here.

That’s the dislocation you want to identify. On the whole, the company will keep surprising to the upside and so will the stock price.

My estimates for 2022 revenue are higher and I see a forward PS in the 7’s or low 8’s. The caliber of mngt, TAM, data/first mover advantage, team of specific machine learning / AI engineers, etc leads me to think the analysts/markets are far too conservative for 2022 and beyond on $UPST.

I too noticed the tweet by Dave yesterday. I added it to my work papers and made the following note. He used the words “shock the world” in 2022. I believe him to be a very competent executive and he knows that people will parse his words. I interpret that phrase as bullish and laden with intentional meaning.

It appears, at the moment, that the market is also looking for companies that are profitable while still growing quickly. $UPST fits that model and it’s an under appreciated aspect of the company that I believe the market isn’t appropriately valuing at the moment. It probably has to do with its limited operating history as a public company.

$UPST has actual net income / adj EBITDA. Q3 ’21: $59m Adj EBITDA. Q2 ’21: $60m Adj EBITDA. Q1-Q3 ’21 total adj. EBITDA $138m. They ended the quarter with +1.0b of cash on the books. 500m of net cash.

I’ve heard concerns on the board about macro growth and how that might affect $UPST. Wage inflation is real and poised to stay with us for the foreseeable future though other inflation pressures will more than likely subside.

The economy will slow in 2022 and 2023. The Fed will raise rates. As rates go up so will credit card rates. The spread between CC rates and personal loans will still be there. People will still consolidate to lower personal loan rates like they do now. They will also still be spending their increasing wages via all sorts of methods and, as Americans do, they will spend using their CC’s. Monkey already mentioned increasing bank partners, etc that will drive revenues in 2022 and beyond.

Autos will be bought even with rising interest rates. How their product is embraced by the market and hence market penetration will be a key element to watch carefully but I have confidence in management.

Assuming a quarter point increase 3 times in 2022 and 3 times in 2023 means by the end of 2023 we’ve added 150 basis points. That’s still below where we were entering 2020 with an economy that is projected to be even stronger than what we had in early 2020.

As the economy undoubtedly slows in 2022 and beyond that could be a driver for stock prices for the right high growth companies because for the right companies they will be even more invaluable to their customers and will continue to grow while other things don’t. The market loves growth especially if the rest of the market is lacking it.

I’ve left out a lot but written way too much. There are clearly many risks. Potential headwinds. Potential tailwinds. Hopefully it’s cohesive and certainly shared humbly. Investing should be done with a lot of humility.


My favorite stock market quote may be this analogy from Andre Kostolany, translation mine:

The relationship between the economy and the stock market is like a man walking his dog to a park. When they walk together, the dog runs around randomly. Sometimes the dog runs in front of the man, sometimes behind the man. When they got to the park, the man had walked a mile, but the dog ran four miles.

Here, the man is the company and the dog is the stock price. The important thing is that they will eventually get to the park at the same time.

What I saw in the last month regarding Upstart the man:

  • Posted 250% YoY revenue growth and guided 16% QoQ growth for the next quarter.
  • Selected by BCU for personal lending.
  • Expanded relationship with First National Back of Omaha after 2 years of pilot lending program.
  • Partnered with National Bankers Association to provide tech for minority owned banks.

The dog, on the other hand, had retreated very far from where it was one month ago.

Can I predict where the dog will go tomorrow, or even next month? No, I can’t. But I see that the man is doing well. Therefore, as an investor, I choose to ignore the noise and continue putting my money on the man, not the dog.


Here’s the thing, Monkey - driving the moronic robotic bots:
Y’all are predicting 200% growth…
14.6… for a company growing 200+%

What if it’s NOT 200%?



What if it’s NOT 200%?

What if at 14x it is 100%, 50%. Innate talking valuation. I’m the end of you justify an investment on valuation in the hyper growth space (apologies to Buffett who got in on the SNOW IPO and has done well with Apple) you are probably mostly going to underperform.

UPST is a wildcard. Look how the pandemic destroyed them and the recovery propelled them. We are still talking 20% sequential growth into Q4 and multiple new markets to open on the next year or two. Even Nvidia disappointed miserably. Up about lord how much since then?

Assuming business success all Monkey is saying is that there is a lot of upside here based upon the usual multiples such successful investments are usually rewarded. Since UPST is in a non-SaaS and cyclical industry perhaps they multiple will be smaller but still at present, if the company is successful, there is a lot of upside.

Now if it fails…look at Cloudera, Talend, MGNI (which didn’t actually fail just collapsed under its own expectations that never came to be), that is what will happen. Of course savvy investors will take the hit and move on long before the bottom.



“ Here, the man is the company and the dog is the stock price.”

This would work well if you replaced company with value. The previous post examining UPSTs protected price to sales ratio is a great attempt at trying to see how far ahead of the man the dogs are right now.

1 Like

Either he’s playing with humble Monkey’s heart, or he’s a con-artist of the highest order.


We will shock the world

I always love Monkey’s posts, he is very wise. And great thread, I like chang’s dog analogy too.

To answer Monkey’s question, I think there is a place in between and why I would mostly attribute that quote as ‘noise’ and not place much import. When I first saw that tweet my first reaction was ‘oh that’s bullish’ too, but then there was something about it that made me feel uncomfortable. When I have a ‘gut feel’ I tend to think about why, until I understand it.

First, who is ‘we will shock the world again in 22’ addressed to? Is it to his employees perhaps (‘good job team, same again next year), is it to investors or to himself or to the world at large? Bear in mind what he and his employees might see as a ‘shocking the world’ might be very different to an investor’s expectations, for example how many banks they get to remove FICO requirements altogether (a major milestone) or partnerships with traditional banks or a Spanish language loan offering, improving more diverse representation in its loan originations, or expanding into new products, all could be perceived as ‘shocking the world’ to a founding CEO, without tangibly driving much incremental contribution to the top line (in the near term anyway). Or could he just be trying to mitigate the damage on the share price? What ‘shocks the world’ is perhaps very different in the eyes of an investor or a CEO.

I had noticed pre and post Q3 earnings several bullish intonations from Dave Girouard as well. Doubling down on the hyperbolic notion of AI being the most transformational change to lending in its 5000 year history, however accurate, while the share price trades at a near 70% discount to its high might hint at a cognitive dissonance and not to place much weight on media-speak.

What I would say though – if he really is confident of the shocking the world in 2022, he doesn’t have to wait long to prove it. Show it in Q4 with your FY22 guidance. It’s as simple as that, until then – it will go down in my book as bravado. Until proven otherwise.

Without a clear view of auto contribution yet, anything $1.1bn-$1.4bn would seem to be a plausible range for FY22. I’d suggest management might guide a bit below that, if they do a FY guide at all. But what more statement can you make to the world heading into 2022 than guiding $1.5bn+? That would shock an investor’s world, certainly. Otherwise you’re just setting yourself up for a fall.

FY22 Auto dependency

You only need to look back to Upstart’s S-1 to see one of the biggest challenges they will face in maintaining their growth rate over the next year or so:

Further, we believe our growth over the last several years has been driven in large part by our AI models and our continued improvements to our AI models. Future incremental improvements to our AI models may not lead to the same level of growth as in past periods. In addition, we believe our growth over the last several years has been driven in part by our ability to rapidly streamline and automate the loan application and origination process on our platform. The Percentage of Loans Fully Automated on our platform was 53% in 2018 and increased to 70% in 2020. We expect the Percentage of Loans Fully Automated to level off and remain relatively constant in the long term, and to the extent we expand our loan offerings beyond unsecured personal loans, we expect that such percentage may decrease in the short term. As a result of these factors, our revenue growth rates may slow, and our financial performance may be adversely affected.

If we can assume that at a 15% market share in their personal loans portfolio and various macro-challenges coming including higher interest rates and presumably higher default rates, it seems likely that Upstart will need auto loans to drive much of its growth next year. This might result in a reduction in automated loans % (a continuation of the drop to 67% from 71% in Q3 due to ‘fraud issues’), therefore lower conversion rates, a prolonged sales cycle with auto dealerships and lower margins. Lower rates of automation and consequently lower conversion rates from auto will challenge the growth rate on a total level. With pressure from sub-prime borrowers on deal sizes, more reliance on personal loans will come from new bank partners which typically have a long onboarding process:

Our sales and onboarding process with new bank partners can be long and typically takes between six to 15 months. As a result, revenues and results of operations may vary significantly from period to period. Prospective bank partners are often cautious in making decisions to implement our platform and related services because of the risk management alignment and regulatory uncertainties related to their use of our AI models, including their oversight, model governance and fair lending compliance obligations associated with using such models. In addition, prospective banks undertake an extensive diligence review of our platform, compliance and servicing activities before choosing to partner with us. Further, the implementation of our AI lending model often involves shifts by the bank partner to a new software and/or hardware platform or changes in their operational procedures, which may involve significant time and expense to implement. Delays in onboarding new bank partners can also arise while prospective bank partners complete their internal procedures to approve expenditures and test and accept our applications. Consequently, we face difficulty predicting the quarter in which new bank partners will begin using our platform and the volume of fees we will receive, which can lead to fluctuations in our revenues and results of operations.

Our financial results could vary significantly from quarter to quarter and are difficult to predict.
Our revenues and operating results could vary significantly from quarter to quarter because of a variety of factors, many of which are outside of our control. As a result, comparing our operating results on a period-to-period basis may not be meaningful.

With an unpredictable and slow onboarding process for new bank partners, how much of Upstart’s personal loan growth is actually underpinned heading into FY22? This is why, in my mind, the reliance is on Auto (and Q4 will be important for management to set that expectation).

Any more insight on the time-frame on Auto roll-out then heading into 2022?

CEO, Nov.17th Citi Fintech Conference:

"Yes. I think any time we’re entering a new space – and this is really our second, is there’s a period of R&D and getting the grounding in place. And so it will move at a pace. And then certainly, there’s inflection points where the conversion rates start to move up, the model start to get better and that certainly was our history in personal loans, and I would expect it to repeat without question in auto and probably on a more compressed time frame. We’re not really starting from scratch, but we are entering a new market.

So as you said, it’s a very large market. It’s probably 6x or 7x larger than the personal loan market. But there’s a lot of problems we have to solve. So I think we’re just getting in there. We expect to become material for our business in 2020 – sorry, 2022. And so we’re, kind of, planning on that. And I think the teams are making fast progress, both on the refinance product and on the purchase product.
I would say our expectation on unit economics over time will be not dissimilar to our personal loan product. We create as much value in the sense of having smarter pricing and a better process. And we don’t necessarily want to extract more value than we need to. So I think you can expect over the long haul, that they are larger loan sizes generally than a personal loan, but the percent take maybe less. So it’s hard to say in the long run.

But generally speaking, I would say, we feel very confident that our value-add in this ecosystem is at least as good as it is in personal lending. So there’s every reason to believe the unit economics will be not dissimilar.

And as you solve that, you can get that rate way up. And it’s worth noting that 70% sounds like, oh, well, how could that be when you’re only solving such a small fraction of error? And it’s because, remember that the people who get that fully automated experience are converting twice as much as the people who don’t. And so there’s a – the rate at which you’re getting people the fully automated experience is going to be at the front of the funnel is a lower number than the back, which means as the opportunity is much bigger than it would look like from that 70% number."

Hmm. Considering this conference was mid November, I would expect slightly more conviction in auto loans than ‘we’re kind of planning on it being material for 2022’, unless he is being severely understated. Which is certainly at odds with the ‘we will shock the world in 2022’ comment just a month later.

On the comments of valuation, I agree that trading at ~10x sales the risk reward is much more favourable than it was at 30x forward sales a couple months ago, but I would caution about the notion of 10x sales being ‘cheap’ for Upstart in the current climate (especially when the only comparative is last year since IPO). Why 10x? Why not 5x? I would not model multiple expansion into any forecast. We know the value of SaaS and recurring revenue and why you might pay 30x sales for a Crowdstrike vs some non recurring alternatives for example, but for Upstart you’re paying for 10x sales for a company where its personal loans total addressable market is only 6x its current revenue run-rate: and it won’t ever get 100% market share. So the reliance is on auto and other products.

(I know this sounds like a bearish Upstart post, but I am actually a bull and I have an overweight position, for many of the reasons cited on the board before. I’m trying to offer more balance and to place more focus on the risk, rather than just the reward. I tried to express this in a message to another board member on portfolio management when the share price was trading $340 up to $400 a few days later, pre-Q3 earnings:
“So take DDOG and Upst for eg, both faced retracement in stock price ahead of accelerative/catalytic underlying biz fundamentals & soft YoY comps (perfect combo), after earnings, and seemed obvious to build positions at the time. Apps feels like sits in this bracket ahead of next couple of quarters - the market dislocation. So have been better with position sizing aggressively when feel reward > risk in those circumstances (doubling/tripling/quadrupling allocations in all 3 on initial retracement). What I’m still struggling with though is position sizing after the market has caught up. Eg upstart now is 27% though I have trimmed ~4%, and I recognise valuation is stretched, the risk reward now seems skewed too vs few months ago. The noise around it makes me feel uncomfortable too as awareness this plays into psychology and have seen how quickly a market darling is dropped from the investosphere… it makes sense to me building up big positions when market dislocation, but now everyone on board feel exposed - even though I like the biz and what management doing, and sure catalysts eg auto coming up. Need to hold LT perspective to justify such an outsized position now.”
I had a cognitive dissonance of my own, the story or thesis hadn’t changed, but the risk reward had.)

Now the market is looking at Upstart with uncertainty and it’s up to management to provide clarity.

In comparison, Bill Stone (Digital Turbine CEO) recently and clearly laid out his 3-5 year plan when investors started to look at the company with uncertainty over its acquisitions (…). I don’t expect Upstart to have visibility to offer the luxury of a 3 year target to the market (though they will have internal targets), but there is value to the Apps CEO’s often understated bullishness. He and his team might not be a former President of Google Cloud, one of Peter Thiel’s 20 under 20 fellows or creating complex AI/ML models to revolutionise 5000 year old industries – but what he does do is under-promise and over deliver and they are relentless with their execution. ”We do what we say and we say what we do”. What more can you want from a CEO?

We need Dave Girouard to be a cold blooded killer as a CEO. Who executes, executes, executes. Who goes out there and kills the opportunity and lets numbers speak for themselves. So far you can’t fault their execution but it’s continuity and clarity that investors expect now. By delivering, he can prove his words of ‘shocking the world’ are not just bravado. All eyes on Q4.


In addition to the financial points made by Monkey and others, it seems to me that Upstart hit a perfect storm.

After its unheard-of Q2 results, the stock price roared. Upstart is not an easy company to understand, but the momentum behind the stock’s Q2 ER pushed it sky high very quickly. Expectations for Q3 earnings, including for me and many here, were for another blockbuster quarter.

Then all of the following happened within a few weeks:

  1. The ridiculous Mark Minervini October 18 interview on CNBC where he endorsed Upstart and then not only couldn’t explain what Upstart did but pretended that his connection was lost to avoid showing that he couldn’t answer the question.

I think that interview did real damage. Those of us who knew Upstart through and through came out thinking less of Mark Minervini. But those who still didn’t know what Upstart did and were already thinking that the stock was basically a meme stock pushed to absurd highs by sentiment based in nothing, had that feeling reinforced. “What does Upstart do?” is still, to this day, a joke on Twitter.

  1. Just a couple of days before earnings, Cramer made the “Wells Fargo just hired them” gaffe, which was much discussed on this board. With a denial coming from Wells Fargo and then the interview transcript being redacted, that was another notch in the belt of the “Upstart is all hype and no substance” crowd.

  2. Earnings season began in earnest and quite a number of companies were dropping on great and very good reports as the market was just beginning, under the hood, to turn against growth names.

  3. Then Upstart had the audacity to only grow at a triple-digit rate instead of a quadruple-digit rate in Q3. There was some deceleration in other metrics, as has been discussed at length else where on the board, but nothing that would remotely justify the price drop that it had. But, in an earnings cycle where only record-breaking ERs would do, the price was hit far harder than others–I think because of the earlier items on this list.

  4. Dan Loeb decided it was time to take his amazing Upstart gains and put them toward a new venture. I understand that he is very happy with his Upstart investment and I get that this is how venture capitalists operate. But between him and Nicoll Allison there has been a big drop in the stock at the open almost every day since earnings. That has continued to put downward pressure on the price, again confirming the sentiment that Upstart is not the industry disrupter with the future most of us here believe it to be and have.

  5. Bank of America downgraded the stock.

  6. The market turned strongly against growth names in November, as our portfolios remind us every day.

  7. Quad witching and tax-loss harvesting in December.

An interesting point in all the carnage is that there is now slightly more institutional ownership in Upstart than there was before earnings. I didn’t write down the exact number then but it was 48.something% institutional ownership on Nov. 9. Despite Third Point taking out a huge chunk, institutional ownership is (as of yesterday’s close) up to 51.07%.

The good news is that going into the Q4 ER, there will not be the sky-high expectations. I do hope that Mark Minervini has taken the opportunity to educate himself about Upstart and the future of lending. But I’m not optimistic on that point.

UPST still my top holding


A peculiar matter about Upstart quarterly results reporting is that they don’t tell us until very late their intended Q report date. Moreover, last year, they didn’t report Q4 until March 17, only two weeks before the end of Q1, 2021. UPST has yet to announce its Q4 2021 reporting date, and if past is prologue, they won’t tell us until at least February

That 3/17/21 report, BTW, was the Mother of all Beat and Raises, not the the Q2 report that everyone who entered the stock later talks about. In that Q4 report, management raised 2021 revenue guidance from $279M to $500M driving the stock from its $60 closing on 3/17 to $89 after hours, thereafter popping to $165 in 3 days, eventually pulling back below $100, enabling Bert to issue his recommendation.

After that kind of guidance bump on March 17, raising to $600M in Q2 should have been widely expected, and i was pleasantly surprised that the May 11 report stoked the market. What we don’t know is whether last year’s late Q4 report date was a one off due to new IPO matters or other special considerations.

I haven’t been surprised by any of the numbers since March 17, and have thus maintained it as a top two position after trimming too late in November. I have been very surprised by the extent of the negative market reaction.

I also question the wisdom of the “shock the world” comment from the CEO if it doesn’t mean a big beat in Q4 and significant positive clarity on auto loans.

All this is to say, the optimism for Q3 reporting numbers were crazy high and I was hoping that kind of thinking was now behind us. We were on our way there until Girouard broke character and re raised expectations with his tweet. He can’t back away from that now.

Nevertheless, none of this should matter in the longer run. It might effect near term share price but it’s all about the business over time. I have been in the camp that significant auto revenue would not occur until 2H of 2022, but i now agree that we’ll need a major bump in 2022 revenue guidance to $1.5B in the next UPST report with encouraging margin and cash flow projections.

Obviously, i think we will get it.


This very simple post is starting to get a little complicated. To AThinkingFool’s point, the only thing that matters is whether the company “executes, executes, executes.”

Personally, I was expecting the following Q3 execution (which was lower than many):

  • $250M in revenue
  • 375K loans transacted
  • a $290M Q4 guide
  • a $100M or so full year revenue raise

Instead we got:

  • $228M in revenue
  • 363K loans
  • a $265M Q4 guide
  • a $60M FY raise

I have no idea what the market expected, and it very well might have wanted even more than I did. Regardless, Upstart didn’t execute, and that’s 99.99% of the reason the stock has been hammered. Virtually all the other reasons listed thus far are uncontrollable noise.

One of the things we’ve seen over and over again here is truly dominant companies have an almost reliable simplicity to their business execution. By its very nature Upstart is more complicated to begin with. That doesn’t necessarily mean it should be avoided. However, trying to factor in the effects of Cramer, quad witching, tax selling, a rotation from growth, etc not only only muddies things further but drifts towards excuse making and/or rationalization. Don’t forget every other company discussed here faces those same variables at all times. It’s not like all those things simply singled out UPST to pick on. Upstart’s disappointing quarter is what kicked everything off.

Upstart either executes, executes, executes starting with Q4 or it doesn’t. I’d argue that’s the very simple post on UPST.



You are claiming UpStart didn’t execute???
(Maybe you got caught up in the meme stock over-exuberance???)


Dan Loeb dumping millions of shares on the market isn’t affecting stock price???


While I think it is fair to say that Upstart failed to meet expectations last quarter (subjective), I respectfully disagree that “Upstart didn’t execute”. In fact, I was pleased with their progress on auto lending. They continue to use words like “meaningful” when talking about 2022 auto revenue. When I heard executives say that I conclude that they have made concrete progress in that area. That’s music to my ears and increases my conviction in the company’s LONG TERM prospects and ability to branch out. It appears that auto lending may only take 1-1.5 years of development (they acquired Prodigy in April 2021) to start contributing. I am not disappointed with that speed of development. They are also working on home mortgage lending in 2022. So even if home mortgage lending takes 2 years that means that by 2024 Upstart could be operating in Personal, Auto, and Home mortgages along with smaller products like micro loans, installment loans, etc. and whatever other niches that come up along the way.

It appears that one overhyped quarter where Upstart still grew at 17.5% QoQ! and many people are forgetting or discounting all the amazing insights unearthed about this company in the months prior to Q3 results. I still value all the amazing research done by jonwayne and others. I specifically haven’t forgot the post displaying Upstart’s dominance in personal loans:… . I can’t get it out of my head how much Upstart was/is beating traditional risk assessment. Q3 does not erase all the thinking that lead to the robust optimism that flowed through this board about Upstart during this past year.

I saw nothing in the Q3 earnings that tells me Upstart is LESS likely to dominate subsequent lending markets (Auto and Home) as they are dominating personal lending. In fact I saw more definite timelines when they expect to be in those markets. With that as my frame I looked past the lower than expected Q3 and continued to look FORWARD to the strong Q4 guide and steady progress of branching further into lending.

I have purchased more and more as upstart drops to near and even BELOW where it was prior to Q2 earnings earnings ($136 on Aug 10)
$240 after Q3 earnings drop
$130 yesterday morning


Long upstart (30%). During this drop I have almost tripled the shares I own in Upstart and increased the weight from 20% to 30% of my portfolio.



You are claiming UpStart didn’t execute???

Yup. Since I listed the EXACT execution I was looking for, I thought it was clear they didn’t meet my expectations. Sorry if that didn’t land for you. More importantly, it appears I’m not the only one making that claim. You are 100% allowed to claim differently since you are of course entitled to your own execution standards.

(Maybe you got caught up in the meme stock over-exuberance???)

If this is meant to be a serious question, I’ll give you a serious reply. I’d suggest you haven’t been paying nearly enough attention if you believe I or the majority of others on this board got steamrolled by a meme stock. Sometimes we just get things wrong, though we never quite know if the mistake is temporary or permanent. It comes with the turf.

And…Dan Loeb dumping millions of shares on the market isn’t affecting stock price???

Not nearly as much as the tens or maybe even hundreds of millions being swapped by everyone not named Dan Loeb since earnings. I’d posit those sales have moved UPST’s market more the past few weeks.

Wait…you are claiming Dan Loeb is the one responsible for the 65% decline??? :smirk:

While I think it is fair to say that Upstart failed to meet expectations last quarter (subjective), I respectfully disagree that “Upstart didn’t execute”.

And I respectfully acknowledge that disagreement. That’s the way these discussions are supposed to work. I also recognize and understand your thesis since I used the very same one to add a bit back post-earnings. The reality is the majority of this exercise is subjective. Those that were happy with last quarter’s execution and believe UPST is still one of their best ideas should absolutely continue holding. Those that weren’t should adjust accordingly. That’s what makes a market.

It’s not about any of us being right on Upstart. It’s about all of us making the decision we believe is best for our portfolio. My point is we should judge Upstart on its merits rather than trying to deflect blame to the broader noise affecting all companies and not just Upstart. And that’s the direction this thread was drifting.


“I thought it was clear they didn’t meet my expectations”

I don’t think it’s fair to the company to say they aren’t executing just because they didn’t meet some exuberant expectations that were way above what they guided for… I say profitable and growing 200% is pretty good execution…

"Wait…you are claiming Dan Loeb is the one responsible for the 65% decline???

And no, but I think he’s responsible for more than the 00.01% drop that you (may) have attributed to him…


Let’s not get all “uppity-start” over this company. We are all very passionate about our old favorite.

To me, the collapse in the share price has less to do with execution or Loeb and partners than it does with the Minervini interview. Not that the interview itself had anything to do with the direction of the stock, but it showed that a lot of “investors” jumped on the bandwagon like it was a crypto currency without any knowledge of what this company did, and what makes it special. Weak hands easily let go, and I think when UPST’s earnings were perceived as “bad news,” it steamrollered and continues to steamroller. I don’t think we’ve heard ANY negative news about the company itself or how they are executing since last quarter. In fact, even good news has been ignored. Even the downgrades have been more about valuation than execution or performance. Couple that with the broad takedown of growth stocks and you have a perfect storm.

I’ve been trying to catch the falling knife since $320 because I don’t think anything has changed from why I originally invested. And I’ve turned a 180% gain into a 50% loss in the process. Worst lost in my life. I’m hoping that with expectations lowered significantly, and institutions replacing the hands of shaky individual investors, we will have some significant price appreciation closer to the next ER. By most metrics, UPST seems like a bargain at these levels. If I’d been more patient and kept some cash on hand, I’d be adding aggressively here. I still believe that there is some phenomenal growth on the near horizon.


UPST long term growth thesis remains intact, so far. They achieve lower default rates and increase approval rates for personal loans far ahead of any other fintech underwriter/lender. In theory this could translate into auto, mortgage, small dollar lending etc.

However, a sustained hypergrowth trajectory? Not so sure about that, after Q3 results.

I’ve said all this before in my prior posts (…), but to sum it up, the number of personal loans transacted did not come anywhere close to making up for the heavy drop in average loan sizes in Q3. That’s a failure of execution, and a very VERY big failure in my eyes.

Please, everyone, stop looking at total revenue QoQ (which was 17.5%)
Stop looking at total rev 200% YoY on a COVID year comp. That’s not what matters.
I don’t care about low quality interest income revenue growth which pads the total revenue number.

I care about the core FEE revenue growth, which came in horribly bad at 12% QoQ. I was looking for AT LEAST 30% QoQ fee revenue growth. I mean, even LendingClub’s dollar loan origination volume in Q3 grew faster than UPST at 14%!!!
StockNovice is 100% correct that UPST in Q3, failed to execute.
Again, that’s why my immediate reaction was to sell everything first within 1 second of seeing that result and to digest the conference call later that night.

So, the question becomes, is this complete Q3 failure due to a one time speed bump (resources in Q3 were devoted to dealing with organized fraud)? Maybe. Q4 guide is strong. That’s a big reason why I rebought a 15% position the day after earnings.

However, it’s very very clear to me that UPST has a lower probability of achieving a sustained hypergrowth status over the next few quarters.

There is new uncertainty:

  1. Personal loan sizes could continue to fall or stay stagnant, as it did in Q2 and Q3
  2. Fraud attacks could hit UPST even harder in the future
  3. Auto loans may not grow fast enough.
    As I wrote in my previous posts, 2000 loans in autorefi were completed in Q3. That’s new information, and disappointing news. I expected a much bigger number as they are growing it off an incredibly small base. “Let’s suppose they grow 100% QoQ for auto refi throughout the next 5 quarters. Then they’ll have 4000 + 8000 + 16000 + 32000 + 64000. Which is 120000 total auto refi loans in 2022. Can they keep triple digit QoQ growth on this front?? It will probably be necessary, since average personal loan sequential growth may slow down further in 2022.”

Now, in full disclosure, I still would have kept my 15% UPST position as of today, but I sold it all a couple weeks ago, when other higher quality SaaS/SaaS-like companies had their stock prices slashed. These other companies have a higher probability of sustained hypergrowth status in the near/medium term future than compared to UPST.

Here’s how I framed it for myself.
Suppose, especially after their stellar earnings reports within the last month or so, that DDOG was at $240, SNOW at $450, ZS at $420. Would I have sold my UPST position to buy them? Probably not. But fortunately for us, they had their prices cut deeply below what I perceive a fair value. DDOG at $160? SNOW at $330? ZS at $280? Sign me up for more shares.

In summary:
UPST is a good business. It is poised for long term growth. But will they hypergrow at 100% in 2022 instead of 30 or 40%?
Q3 results showed us there’s a higher probability of the latter. And if that happened, for a non-SaaS, heavily macro exposed stock, that growth rate won’t cut it for me.
I’m looking for the highest possible CAGR in our portfolio. I’d rather own hypergrowth SaaS (or SaaS-like) companies that just had their stock prices unfairly discounted in the ongoing sector rotation.

Now, I could be wrong and UPST might rebound back to $400 in the next quarter, while my SaaS holdings lag far behind. Would I regret it? No - I think I made my decision based on the best available information and estimated probabilities at this time.


I don’t think it’s fair to the company to say they aren’t executing…

The market is rarely if ever fair, and that’s who has the final say.

…just because they didn’t meet some exuberant expectations that were way above what they guided for…

The most successful hypergrowth companies quite regularly “meet some exuberant expectations that were way above what they guided for.” That’s a major part of the reason for their sustained success. Anyone new to this style should probably read those last two sentences twice.

…I say profitable and growing 200% is pretty good execution…

“Pretty good execution” often doesn’t cut it when great execution is expected. When that combination occurs, these companies tend to get rerated fast. This is just another example, and it won’t be the last.

Look, we are clearly getting stuck on UPST since we’ve had multiple threads on the same issues. No one seems to have a problem with LSPD’s haircut because we see where the quarter fell short. And I haven’t seen anyone question DDOG, MNDY, ZS, SNOW or even S despite those stocks being hit as well in this decline. Why? Because those businesses executed well enough to meet expectations this quarter.

Something somewhere just didn’t click for Upstart in Q3. Even jonwayne235, who has shared as much quality work on UPST as I’ve ever seen anyone do with any company, just graciously chimed in for at least the second time with why he thought the quarter was flawed. It’s not Mark Minervini’s fault or Jim Cramer’s fault or Dan Loeb’s fault. None of them put those shares in our accounts. We did. Now each of us is solely responsible for how we manage the position going forward. With literally dozens of UPST posts since earnings, all the info anyone needs is right there for the taking if you’re willing to sort through it.

Lastly, a quick pro tip (which I realize could possibly get this post deleted so read fast): Don’t post a string of incredulous sounding questions with three question marks at the end of every one if you don’t actually want an attempt at an honest answer. You might not like what you hear.