Well, I already noted LC’s earnings and per jonwayne, there is a belief that LC’s earnings will portend strong earnings for Upstart.
In the past 3 quarters from Q4-Q2 for QoQ growth:
LC: 39.4%, 93.2%, 20.5% (gross figures: $29.9, $98.6, $41.8)
UPST: 39.9%, 60%, ??? (gross figures: $$34.64, $72.6, ???)
In the past 3 quarters from Q4-Q2 for beat %:
LC: 11.4%, 46%, 7%
UPST: 2.8%, 21.2%, ???
Using LC as a proxy, I would assume a 10-20% beat is reasonable to believe, I think it’ll be higher given the partnerships, but worst case I would assume is a 10% beat ($237 M, 22% QoQ) and a 0-5% Q4 guide which would put revenue at $248 M and $800 M total for FY 2021.
In addition, if Upstart’s Contribution Margin Q3 guide of 45% is on target which I believe would mean more Upstart referral vs. platform/partner usage, this could hurt margins and could cause some concern to investors.
Basically, if Upstart reports what would be a “good quarter” for any other type of company, i.e. 10% beat, conservative’ish guide, and showing contribution margins are more in the mid-40s vs. high 40’s, low 50’s, the stock sells off hard.
Most likely, I would assume $250-265 M in Q3 revenue and a $275-290 M guide, but then again, this post is about worst-case scenarios. We’ve already had a bunch of predictions on what earnings will most likely be, but who knows, there’s always a chance (albeit small imo) that Upstart’s guidance disappoints and this turns into a blood bath. Hence why I wanted to see bear cases.