Replies to post #13058 on Keeping It Simple

[eastunder]

I'll bite. Starter shares.

Will build

[eastunder]

UPST 83.38 on below Ave volume

[eastunder]

Down 75% From its High, Is Upstart Stock a Smart Buy Now?
By Trevor Jennewine - Apr 11, 2022 at 10:46AM

KEY POINTS

Upstart stock climbed 1,900% through the first three quarters of 2021 but has since fallen 78% from its high.

Upstart uses big data and artificial intelligence to help lenders work more efficiently.

While its financial performance has been impressive, Upstart's AI models have not been tested during a down period of the credit cycle.

Upstart Holdings ( UPST -6.15% ) is a good example of irrational exuberance in action. Throughout 2021 a flurry of excitement surrounding the fintech pushed its share price higher by leaps and bounds. In mid-October the stock peaked at $401.49 per share, representing a 1,907% return since its IPO less than a year earlier. However, despite strong financial results, concerns regarding valuation have since brought the stock crashing back to earth, and shares currently trade 78% below their all-time high.

After that dismal sell-off, is Upstart stock a smart buy? Let's dive in.

On a mission to modernize the lending industry
Banks often build their lending credit models around Fair Isaac's FICO score, a three-digit number meant to reflect how creditworthy a particular borrower is (or is not). The typical FICO scorecard is based on between 12 and 20 variables, and while banks often incorporate other criteria, many of the most sophisticated credit models consider no more than 30 variables.

Upstart sees that as a problem, arguing that banks often lack sufficient data to quantify risk correctly when making lending decisions. As a result, some creditworthy borrowers are excluded from the system, and many that are approved end up paying too much interest because they have to subsidize the portion of borrowers who will inevitably default. For instance, 80% of Americans have never defaulted on a loan, but only 48% qualify for prime rates.

Upstart aims to make the credit industry more efficient. It provides lenders with a suite of tools for borrower identity verification, bank account verification, and credit decisioning, as well as adverse action notification and loan servicing. More importantly, its platform captures over 1,500 data points per borrower -- far more than traditional credit models -- and it measures those variables against past repayment events to quantify risk.

In that way, each time a borrower makes or misses a payment, Upstart's AI model gets a little smarter. Management believes that network effect is a significant competitive advantage, and it's hard to argue with the results.

How to measure the real-world impact of Upstart's AI models
Internal studies suggest that Upstart's AI-powered platform is quite effective. Compared to traditional credit models, it can reduce defaults by 75% while keeping approval rates constant, or it can boost approvals by 173% while keeping default rates constant. Either way, lenders make more money, which means they can afford to offer lower interest rates to consumers. Of course, internal studies are not the same as real-world results.

Fortunately, investors can glean some insight into the performance of Upstart-powered loans thanks to firms like the Kroll Bond Rating Agency (KBRA). How does that work? A large portion of Upstart-powered loans are actually pooled and sold to investors as asset-back securities. KBRA periodically reviews those securities and publishes the results free of charge. According to a report filed in April 2022, KBRA has lowered its loss projections for all Upstart securities issued between 2018 and 2020, and some issued in 2021. KBRA has not increased its loss projections for any securities. That's good news for shareholders.

However, delinquencies are rising faster in more recent securities. For context, remember that Upstart has not been tested during a down period in the credit cycle. Interest rates have been relatively low for the last decade, and until mid-2021, inflation had been mild for years. But now, with inflation at a 40-year high, borrowers likely have less spare cash, which could lead to increased loss rates.

It's still too early to jump to any conclusions. Right now, shareholders should be pleased with the results of KBRA's analysis, but they should continue to monitor the performance of Upstart-powered loans in the coming quarters and years.

Disrupting a multi-trillion dollar market
Upstart is growing like wildfire. As of Dec. 31, 2021, the company has 38 bank partners on its platform, more than triple what it had a year earlier. Better yet, transaction volume (i.e. the sum of all loans originated on its platform) surged 241% to $11.8 billion in 2021. In turn, revenue skyrocketed 264% to $849 million, and the company generated free cash flow of $153 million, up from $10 million in 2020.

Going forward, Upstart has plenty of room to grow. Its platform is currently used to originate personal and auto loans, two markets that comprise an $820 billion opportunity. For perspective, Upstart's trailing-12-month transaction volume of $11.8 billion means it has captured less than 2% of its current addressable market. But management has even bigger ambitions. The company eventually plans to expand into new verticals of the lending industry, including the $4.6 trillion mortgage origination space and the $644 billion small business loans space.

In short, Upstart is disrupting a multi-trillion dollar industry, and with shares now trading at 10.3 times sales -- near the very bottom of their historical range -- now looks like a good time to buy this growth stock. Of course, there are no guarantees that Upstart ever regains its previous highs, but given its incredible financial performance and massive market opportunity, I think it's worth the risk.

[eastunder]

UPST: note 35% short

https://shortsqueeze.com/?symbol=upst&submit=Short+Quote%99

[eastunder]

The 2 Keys to Upstart's Success
By Justin Pope - Aug 5, 2022 at 8:00AM
KEY POINTS
Upstart has lost most of its value.
But the company's AI seems to work, and lenders are signing on.
Ultimately, that's what matters to long-term investors.
https://www.fool.com/investing/2022/08/05/the-2-keys-to-upstarts-success/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article

NASDAQ: UPST

Current Price
$27.67
Price as of August 5, 2022, 11:30 a.m. ET

Ignore the noise and focus on what makes Upstart a potential home run.
Financial technology company Upstart Holdings (UPST -2.33%) has become one of the most debated companies on Wall Street.

The stock has made both bulls and bears look good. It appreciated more than 1,200% after its late 2020 initial public offering and has now declined more than 90% from its peak.

Upstart is both a young and volatile company and a business that works in the cyclical consumer lending sector. Push all the fear, doubt, and uncertainty aside. Upstart can still be a long-term winner -- as long as these two things keep happening.

1. Remain better than FICO
Upstart is a technology company that uses artificial intelligence to determine creditworthiness for consumer loans. The FICO score has been the measuring stick lenders have used for decades to determine borrower creditworthiness. Upstart claims that credit scores are a broad stroke and people may have low or immature credit, despite being capable of paying back a loan.

Its artificial intelligence digests a cocktail of more than 1,000 user data points to determine borrowers' capacity to repay a loan independently of their credit scores. Upstart says its technology can approve borrowers at the same rate but see 75% fewer defaults.

It's a bold claim, but Upstart has backed it up. The company's Q1 2022 earnings deck included a chart comparing default rates for Upstart's loans by credit score against its internal grading scale. Upstart showed lower default rates in four of its five tiers.

Let's hope management updates this chart so investors can see how Upstart's AI keeps performing throughout a changing economic cycle. However, there's an even better indicator of whether Upstart's AI works as advertised.

2. Accumulate lending partners
Upstart doesn't want to be a lender. Instead, it works with a network of partner banks and credit unions. Upstart wants to originate as many loans as possible by placing its technology in banks or creating loans directly and then selling them off to investors. Upstart isn't trying to make money on loan interest, which means it isn't competing with its partner lenders.

It would make sense, then, that more lenders working with Upstart would signal that the technology does work as stated. Upstart has said that its total sales and onboarding process can take between six to 15 months; it's a big commitment for lenders to make, so success in expanding its referral network could be an excellent sign that lenders trust the AI.

Upstart had just 18 lending partners in Q1 2021, but that had grown to 57 as of the end of March. Of them, 11 lenders have been satisfied enough with the technology to remove the FICO score from their loan application requirements, which could also speak volumes about the platform. The company's second-quarter earnings report is looming, and investors will see how much its referral network grew over the past few months.

The stock is less risky today
Upstart is working on expanding into different types of loans, but personal loans remain the company's largest segment by a country mile. A softer economy could mean fewer people taking out loans, and that could slow revenue growth, or even cause the business to shrink.

That's how a cyclical company works; lending has ups and downs. It's all about surviving the downturns, and it seems that Upstart can do just that, barring a financial crisis or something similar.

The company had just over $1 billion in cash at the end of March, more than enough to cover all of the loans it's holding on its balance sheet, even if they all defaulted -- an event I'd say is pretty unlikely. Again, investors will want to review updated Q2 results to see how Upstart is navigating the slowing economy.

Obviously, Upstart could keep falling from here, but the large share decline of the recent past means that investors are looking at more potential upside if the business thrives. In other words, there is more upside to compensate you for putting money into a riskier asset.

How cheap has Upstart gotten? Consider that the company's total market cap is $2.4 billion. That's half of its value sitting as cash on Upstart's balance sheet! A reliable company like Coca-Cola has just 4% of its market cap in cash.

Things could be shaky for Upstart in this economy, but the long-term potential could make it a risk worth taking if its AI keeps working and its lender network keeps growing.

[eastunder]

UPST

Short Interest Ratio (Days To Cover)
2.4
Short Percent of Float
35.73 %
Short % Increase / Decrease
0 %
Short Interest (Current Shares Short)
25,840,000
Shares Float
72,320,000
Short Interest (Prior Shares Short)
25,750,000

https://shortsqueeze.com/?symbol=upst&submit=Short+Quote%99

[eastunder]

BBBY $27.41
Today's Change $11.41(+71.31%)

Today's Volume 289.6MAbove Avg.



FUBO $6.85
Today's Change $2.47(+56.39%)

Today's Volume 86.9MAbove Avg.




UPST $36.90
Today's Change $3.82(+11.55%)

Today's Volume 10.5M Above Avg.

[eastunder]

UPST 27.57 5d 28.11
track rise above the 5 day
looking for volume
d4t



Upstart Holdings

https://www.fool.com/investing/2022/08/23/4-growth-stocks-billionaires-cant-stop-buying/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article

The first phenomenal growth stock that's attracted the attention of at least one billionaire money manager is cloud-based lending platform Upstart Holdings (UPST 3.73%). Billionaire Philippe Laffont of Coatue Management gobbled up more than 2.36 million shares of Upstart during the second quarter, making it a top-30 position for the hedge fund giant.

What makes Upstart such an intriguing company is its artificial intelligence (AI)-driven platform. Relying on machine learning for loan vetting has resulted in nearly three-quarters of all loan applications being approved digitally. This saves time and considerable cost for the company's nearly six dozen lending partners.

Equally important is the fact that Upstart's approvals have led to a broader swath of consumers being approved. In general, Upstart-vetted applicants have lower credit scores but have generated similar credit profiles (i.e., delinquency rates) as traditionally vetted applicants with higher average credit scores. The takeaway? Upstart can bring a larger pool of applicants to lenders without increasing their credit risk.

The big question mark for Upstart is how it'll fare during an economic downturn with interest rates skyrocketing. Since it hasn't exactly weathered a true recession or lasting downturn, and lending institutions are clearly becoming pickier about the loans they'll take on, Upstart's share price has taken a big hit.

However, with Upstart demonstrating that it can be quite profitable during long-winded periods of expansion, and the company moving its AI-driven loan-vetting solutions into larger markets, such as auto and small business loans, the sky could be the limit for patient investors.

[eastunder]

UPST 401 High 10/15/21 to cpps of 24.38 9/2/22

Short Interest Ratio (Days To Cover) 3.0
Short Percent of Float 37.46 %
Short Interest (Current Shares Short) 26,000,000
Shares Float 69,400,000
Short Interest (Prior Shares Short)25,840,000

Sep 20 EPS .17 on 65.4m sales
Dec 20 .08 on 86.7m
Mar 21 .22 on 121.4m
Jun 21 .62 on 194 m
Sep 21 .60 on 228.5 m (.60 vs .17)
Dec 21 .89 on 304.9 m (.89 vs .08)
Mar 22 .61 on 310.1m (.61 vs .22) and then....
Jun 22 .01 on 228.2m (.01 vs .62) Why?

337, 594, 687, 603 (4 Q's change) fund ownership
p/e 12
2.75 cash flow
40% ROE
BV x2.56
2022 est .68
2023 est 1.44

INSIDER SELLING

[eastunder]

Will Upstart Stock Reach $30 in 2023?
By Neil Patel – Dec 20, 2022 at 7:00AM

https://www.fool.com/investing/2022/12/20/will-upstart-stock-reach-30-in-2023/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article

KEY POINTS
Upstart's stock has gotten hammered over the past 14 months.
Upstart relies on robust credit markets for its business model to thrive.
Investors shouldn't expect the $30 target to be reached in 12 months, as this implies a 100% gain.

Current Price
$14.36

Price as of December 20, 2022, 3:34 p.m. ET

The beaten-down fintech disruptor would need a major boost from the economy.
It has been a difficult year for artificial intelligence-powered lending platform Upstart Holdings (UPST -1.31%). The softening macroeconomic situation in the U.S. has resulted in declining revenue and net losses, a huge reversal from the company's monster success in 2021. As a result, shares are down a whopping 90% in 2022.

Despite Upstart's troubles, is it possible this fintech stock rises 100% over the next 12 months to reach $30? Let's take a closer look at how likely (or unlikely) this price target is.

It's all about the macro

Even though Upstart touts itself as simply a platform that facilitates loan originations for its partner base of 83 combined banks and credit unions and 702 auto dealership locations, collecting a fee in doing so, it's strikingly clear the company is sensitive to the whims of the economy. In 2021, shares skyrocketed more than 850% between the start of the year to mid-October thanks to loans originated, sales, and profit that jumped 338%, 264%, and 2,150%, respectively, compared with the prior year. These are ridiculous gains.

The deteriorating economy that has characterized 2022, however, has been a drag on Upstart's business. In the most recent quarter (Q3 2022, ended Sept. 30), revenue declined 31.1% year over year. And the company posted an operating loss of $58.1 million in the same time period. Upstart is also starting to see loan losses increase compared with prior expectations.

This makes complete sense. As the Federal Reserve raises interest rates, as it has done aggressively this year, borrowing costs across the economy go up. And this discourages people from wanting to take out loans to pay for things, especially personal loans and auto loans, areas Upstart specializes in. The opposite is true when interest rates are lower and credit flows more freely throughout the economy.

Trying to predict the direction the economy is headed, especially over such a short time frame of one year, is impossible to do. And because Upstart's business model is tied so closely to the state of the economy, this makes forecasting its financials a difficult task.

The good news is that this business has true disruptive potential. Its lending platform can originate loans with higher approval rates and lower loss rates compared with the traditional Fair Isaac FICO credit model. Upstart's model has also approved a larger number of minority borrowers at better interest rates. This is all a net positive for society, in my opinion.

But even though Upstart is definitely in a slump right now, this doesn't mean the company is dead. A robust economic backdrop is all that's needed to turn things around. Unfortunately, we can't say for certain when this favorable situation might happen again.

An unlikely scenario

To try to figure out whether a $30 target is in the cards, we can look at Wall Street analyst estimates to at least get a sense of the consensus view. They estimate that for 2023, Upstart will post earnings per share of $0.17. So if the stock were to hit $30 in one year, the price-to-earnings ratio would be an eye-watering 176.

Many financial experts and economists are predicting that a recession will happen sometime next year, and that would obviously be a major headwind for Upstart. But even if the U.S. avoids an economic downturn, it's probably not likely we will experience an extremely supportive macro environment like what we had in much of 2021.

Once it is done raising interest rates, the Federal Reserve will probably keep them steady at an elevated level next year, at least much higher than they were in 2021. And that means Upstart won't put up the monster numbers in 2023 that it did in 2021.

As a result, a $30 target, which was a price Upstart was last at in August, seems unlikely over the next 12 months. But for those who believe in the long-term prospects of the company and think the stock looks too cheap to ignore, now might be the best time to be a buyer, as shares are down 90% in 2022.

[eastunder]

Short Interest UPST
Percentage of Shares Outstanding 32.81
Number of Shares Short 26.86M
Number of Shares - Previous Month 24.83M
Short Interest Ratio (Days) 7.40
Short Interest Ratio - 1 Month Ago (Days) 6.06

[eastunder]

UPST: Item 2.05 Costs Associated with Exit or Disposal Activities.

https://www.sec.gov/ix?doc=/Archives/edgar/data/1647639/000164763923000006/upst-20230131.htm

On January 31, 2023, in response to the challenging macro environment where many lenders and credit investors have significantly reduced or paused loan originations, Upstart Holdings, Inc. (“Upstart”) implemented a plan of reorganization (the “January 2023 Plan”). The January 2023 Plan is designed to reduce operating costs, streamline operations and return Upstart to profitability. The January 2023 Plan involves a reduction of Upstart’s current workforce by approximately 20%, or approximately 365 employees.

Upstart estimates that it will incur approximately $15 million in total charges in connection with the January 2023 Plan. Upstart expects these charges to be in the form of future cash expenditures related to severance payments, employee benefits and taxes. In addition to these charges, Upstart expects to recognize approximately $3 million of one-time non-cash savings related to the reversal of previously expensed stock-based compensation associated with forfeited stock awards. Upstart expects that most of the charges and cash expenditures related to the January 2023 Plan will be incurred or completed in the quarter ending March 31, 2023.

When the January 2023 Plan is fully implemented, Upstart expects to realize cash savings of approximately $57 million in operating expenses, primarily related to employee cash compensation and benefits, over the next 12 months. Upstart also expects to realize additional non-cash savings of approximately $42 million related to stock-based compensation through 2025.

Upstart also plans to suspend development of its small business loan product until macroeconomic conditions improve.

Upstart may incur other charges or cash expenditures not currently contemplated as a result of or in connection with the January 2023 Plan. The Company intends to exclude any charges related to the January 2023 Plan from its calculation of adjusted EBITDA and adjusted net income.

[eastunder]

UPST Cpps @ 20.20 20d >50d (day 1) 2/1/23

Earnings on 2/14 A

[eastunder]

UPST Gap 17.30 cpps 17.64
Day 4 since made

[eastunder]

UPST Gap 17.30 filled 11 days
16.51 curr low of day

50 day tag @ 16.86

CPPS @ 17.35

Color me intrigued.

[eastunder]

UPST: 13.95 YOU should be a MEME stock

Cuz you suck and you have a shit ton of shorts.

EPS 11 days

[eastunder]

Where Will Upstart Stock Be in 5 Years?
By Jennifer Saibil – Apr 28, 2023 at 7:00AM

https://finance.yahoo.com/m/5091e2b8-91f1-3d2e-89b2-60fe4ad073a2/where-will-upstart-stock-be.html

KEY POINTS
Before interest rates soared, Upstart's model demonstrated value and business was skyrocketing.

In the current macroenvironment, lenders and borrowers aren't flocking to Upstart's platform.

Current Price $13.97 Price as of April 28, 2023, 2:19 p.m. ET


The one-time market darling has landed with a thud. But it could start climbing again.
It hasn't even been two years since Upstart (UPST -3.45%) stock reached a pinnacle, with the rare and enviable gain of more than 1,000% from its initial public offering in late 2020. From that peak it has since plummeted, losing 96% of its value since that time.

But hope isn't necessarily all lost for this artificial intelligence (AI) disruptor. The near-term outlook still looks shaky, but in the long term, this stock could make a comeback. Let's see what it could look like in five years.

A better approach to credit assessment

Upstart was created to offer an improved way to assess borrower credit risk. Attaining credit is a gateway to financial mobility for millions of Americans. But according to Upstart, many of them are denied credit because of inadequate assessment tools, despite the fact that they don't pose a significant credit risk. Upstart's appeal was that it developed an AI-powered platform that evaluates many more factors than the traditional credit-scoring model, and it claimed that it could approve more loans without adding risk to its partner lenders.

That's an attractive premise for lenders, who primarily make money from loan interest. All creditors know that there will be some amount of defaults, but they want to limit that as much as they can. At the same time, their entire business rests on making loans to make money.

What's been going wrong

Upstart took off when interest rates were low. The market was flooded with people taking out low-interest-rate loans and easily paying them back. Upstart's sales and loan volume soared, leading to rising profit and happy shareholders.

This didn't continue once interest rates rose. Upstart's platform is less useful now because more borrowers are in higher risk brackets. It's also having a harder time selling its loans to third-party institutions in this climate, and keeping its loans on its own books gives it more exposure to credit risk. Upstart's low exposure to credit risk, once an advantage, has vanished.

Revenue has plunged, and the company has swung from profitability to losses.



How it could turn back around
That doesn't mean game over for Upstart. It's going through some tough times right now, and as long as the interest rates stay high, it doesn't look like Upstart's prospects will improve. For the first half of 2023, declines are likely to be severe as in 2022. But for the second half of the year, year-over-year comparisons may begin to shape up.

Long term, it's still pushing to improve its product and gearing up to recover when the economy is more favorable. There are still signs of life, such as increasing number of partners both in its personal loan and auto loan categories.



It's also still planning to branch out into new categories, including the enormous mortgage market, which is bigger than all of its other markets combined.

A likely outcome in five years
Five years is a lot of time, and business could be drastically improved by then. Interest rates are likely to come down at some point, and more consumers will seek credit. Upstart should continue to add clients and products.

Investors do have to keep in mind that, regardless of what happens, Upstart has demonstrated that it cannot operate well when interest rates are being hiked. The Federal Reserve doesn't raise interest rates unless it thinks it has to, and in the past year it deemed rate increases necessary to combat inflation. The caveat to that is that once Upstart is bigger, has more established partners, and has many thousands and even millions of more data points in its model, it may endure future interest rate hikes in better form.

In the meantime, Upstart stock isn't an investment most investors would want to start a position in right now, even at this price. That could change, though, and investors should keep watching Upstart stock.

[eastunder]

UPST 13.36 Earnings 5-9 A

5d 12.56 (17 days below. 18th day went above: Track)

[eastunder]

Upstart Faces Another Big Risk: The FDIC Is Watching Its Top Bank Partner
By Bram Berkowitz – May 5, 2023 at 5:57AM

KEY POINTS
In March, the FDIC entered into a consent order with Cross River Bank, a key partner for Upstart.
Cross River not only originates many Upstart loans but retains them as well.
Higher interest rates have made secondary investors reluctant to purchase Upstart loans.


The fintech company has greatly struggled during the Federal Reserve's interest rate hiking cycle.

Upstart (UPST 5.78%) has had a rough go of it ever since the Federal Reserve began raising interest rates more than a year ago. The artificial-intelligence-assisted lender's stock is down more than 85% over the past year.

And now another big risk has emerged. The Federal Deposit Insurance Corporation (FDIC) recently announced that on March 8, it entered a consent order with the privately held Cross River Bank. Cross River helps a lot of fintech companies offer banking services from behind the scenes, and Upstart does a lot of business with Cross River.

If Cross River has to pull back or limit its business with Upstart, that will exacerbate the challenges the company is already facing.

A key funding partner

Upstart is in the business of originating personal and auto loans for consumers, but the company is not a bank. It really specializes in developing algorithms that attempt to better assess credit quality than more traditional methods. Upstart partners with third-party banks to originate the loans processed through its platform, and those loans are either sold to secondary investors or funded and retained by banks and credit unions.

Cross River is one of the two banks that originate most of the loans processed through Upstart's platforms. According to Upstart's annual regulatory filing, Cross River Bank originated 51% of the loans processed through the platform, and fees received from Cross River accounted for 45% of total revenue in 2022.

The FDIC's consent order suggests that Cross River had been involved with unsafe banking regulations related to fair lending laws. Because Cross River Bank partners with so many fintech companies, it does seem like the order is targeted at these operations.

A spokesperson from Cross River told American Banker that the order is connected with activity by the bank in 2021 and the bank has since "made significant enhancements to our fair lending and other programs including investing in technology and personnel" that will be completed this year. The spokesperson added that the consent order does not place restrictions on the partnerships Cross River has in place with fintech companies like Upstart.

If Cross River went away, I do think Upstart could likely find another bank to pick up the slack on originations -- potentially FinWise Bancorp, its other main bank partner.

But Cross River has also reportedly been retaining many Upstart loans. According to a recent research note from analysts at Compass Point, Cross River Bank is the largest single buyer of Upstart loans and accounted for 17% of all loan funding in 2022 and 57% of all Upstart loans that are funded by banks and retained on their balance sheets. This is very problematic because although bank funding makes up a small portion of the total overall loan volume, it is the most stable source of funding for Upstart in this high-interest-rate environment.

Currently, secondary investors are not interested in buying Upstart loans because they are facing higher funding costs themselves and are concerned about how credit quality on Upstart loans will hold up, especially if there is a more severe recession. This has led to a huge decline in the number of loans Upstart can originate because the company essentially has nowhere to place the loans right now. My own view of Upstart's path to a more resilient business model was based on getting more banks and credit unions to fund and retain loans.

Upstart's model continues to look broken

While Cross River may very well continue to be able to originate loans for Upstart, this is yet another risk to the funding side of Upstart's model at a time when it really can't afford any more setbacks. The capital markets have all but dried up for Upstart at this point and will likely remain this way until the Fed pauses its rate hikes and investors can catch their breath.

But I was even more concerned to learn that Cross River makes up 57% of banking funding volume, because Upstart has 90 bank partners and I wouldn't have thought that one bank constituted so much of the overall bank funding volume. This in my mind is a problem and suggests that banks and credit unions have either really pulled back or were only doing minimal business with Upstart in the first place. As this rate cycle has demonstrated, relying solely on the capital markets for loan funding is not a good or stable model.

The best future for Upstart is to increase bank funding for its loans, and this recent consent order makes this path potentially harder, which is why I continue to be concerned about the future of this stock.

[eastunder]

Upstart Announces First Quarter 2023 Results

https://www.businesswire.com/news/home/20230509006181/en/Upstart-Announces-First-Quarter-2023-Results


May 09, 2023 04:05 PM Eastern Daylight Time
SAN MATEO, Calif.--(BUSINESS WIRE)--Upstart Holdings, Inc. (NASDAQ: UPST), a leading artificial intelligence (AI) lending marketplace, today announced financial results for its first quarter of fiscal year 2023 ended March 31, 2023. Upstart will host a conference call and webcast at 1:30 p.m. Pacific Time today. An earnings presentation and link to the webcast are available at ir.upstart.com.

“I’m pleased with the progress we made in Q1 against the objectives I set out last quarter,” said Dave Girouard, co-founder and CEO of Upstart. “Despite the headwinds facing our industry, we secured multiple long-term funding agreements, together expected to deliver more than $2 billion to the Upstart platform over the next 12 months.”

First Quarter 2023 Financial Highlights

Revenue. Total revenue was $103 million, a decrease of 67% from the first quarter of 2022. Total fee revenue was $117 million, a decrease of 63% year-over-year.
Transaction Volume and Conversion Rate. Lending partners originated 84,084 loans, totaling $997 million across our platform in the first quarter of 2023, down 78% from the same quarter of the prior year. Conversion on rate requests was 8% in the first quarter of 2023, down from 21% in the same quarter of the prior year.
Income (Loss) from Operations. Income (loss) from operations was ($132) million, down from $34.8 million in the same quarter of the prior year.
Net Income (Loss) and EPS. GAAP net income (loss) was ($129) million, down from $32.7 million in the first quarter of 2022. Adjusted net income (loss) was ($38.7) million, down from $58.6 million in the same quarter of the prior year. Accordingly, GAAP diluted earnings per share was ($1.58), and diluted adjusted earnings per share was ($0.47) based on the weighted-average common shares outstanding during the quarter.
Contribution Profit. Contribution profit was $67.6 million in the first quarter of 2023, down 54% year-over-year, with a contribution margin of 58% compared to a 47% contribution margin in the same quarter of the prior year.
Adjusted EBITDA. Adjusted EBITDA was ($31.1) million, down from $62.6 million in the same quarter of the prior year. The first quarter 2023 adjusted EBITDA margin was (30%) of total revenue, down from 20% in the same quarter of 2022.
Financial Outlook

For the second quarter of 2023, Upstart expects:

Revenue of approximately $135 million
Revenue From Fees of approximately $130 million
Net Interest Income (Loss) of approximately $5 million
Contribution Margin of approximately 60%
Net Income (Loss) of approximately ($40) million
Adjusted Net Income (Loss) of approximately ($7) million
Adjusted EBITDA of approximately $0 million
Basic Weighted-Average Share Count of approximately 83.1 million shares
Diluted Weighted-Average Share Count of approximately 83.1 million shares

[eastunder]

UPST Gap up @ 14.13 (5/9)

[eastunder]

Castlelake Reaches Purchase Agreement for up to $4 Billion of Consumer Installment Loans Originated on Upstart's Platform

11:00 AM ET, 05/15/2023 - PR Newswire

MINNEAPOLIS, May 15, 2023 /PRNewswire/ -- Castlelake, L.P. ("Castlelake"), a global alternative investment manager with 17 years of experience investing in asset-rich opportunities today announced that Castlelake, together with a co-investor and minority partner Eltura Capital Management, has reached an agreement to purchase up to $4 billion of consumer installment loans from Upstart (NASDAQ: UPST), an artificial intelligence (AI) lending marketplace. The purchase agreement consists of the acquisition of a back book of loans and a forward flow arrangement.

Upstart connects millions of consumers to 99 banks and credit unions who leverage Upstart's AI to approve more borrowers at lower loss rates, while simultaneously delivering the exceptional digital-first experience customers demand. More than $32 billion in loans have been originated on Upstart's platform since its inception in 2012. Through the transaction, Castlelake will leverage its experience underwriting consumer credit and small business loans to provide Upstart with the ability to upsize its business.

"Through this purchase agreement, Castlelake is pleased to partner with Upstart to expand its business in response to the increasing demand for affordable credit in today's economic environment," said John Lundquist, Partner, Specialty Finance at Castlelake. "Against a backdrop of increasing economic uncertainty, Castlelake is committed to helping support Upstart's mission of unlocking mobility and opportunity for millions of U.S. consumers."

"Upstart is excited to collaborate with a firm that we believe is an experienced and dependable capital provider through economic cycles," added Sanjay Datta, CFO of Upstart. "Castlelake's support will help ensure we have the resources to continue scaling the deployment of our AI models and expanding access to affordable credit for all consumers."

The transaction is a recent example of Castlelake's participation in the consumer credit and specialty finance sector, where it has both acquired assets and provided asset-based private credit. Other recent transactions include a £100 million facility commitment for a fintech company focused on expanding its revenue-based financing solution, and an agreement to provide credit to a tech-enabled trade financing platform built for small and medium-sized businesses.

"Whether through asset acquisition or bespoke private credit solutions, Castlelake has both the experience and flexibility to support companies operating in the specialty finance and consumer credit arena," said Isaiah Toback, Partner, Deputy Co-chief Investment Officer at Castlelake. "With sustained consumer demand for affordable credit and the ongoing retrenchment of traditional lenders, we believe that private capital represents an increasingly important part of the financing market for companies seeking steady, secure growth."

About Castlelake

Castlelake, L.P. is a global alternative investment manager focused on investments in real assets, specialty finance and aviation across the risk spectrum, from value-oriented to income and investment grade credit. Founded in 2005, Castlelake manages approximately?$20 billion?of assets. The Castlelake team comprises more than 200 experienced professionals, including 89 investment professionals, across seven offices in?North America,?Europe?and?Asia. For more information, please visit?https://www.castlelake.com/.

[eastunder]

UPST 23.35 (off of a high of 24.48)






20d vs 50d

[eastunder]

None of These Wall Street Analysts Recommend Buying This AI Stock -- They Might Be Wrong
By Anthony Di Pizio – Jun 8, 2023 at 7:59AM

https://finance.yahoo.com/m/85a21b57-6039-328b-9283-ad59156dbd72/none-of-these-wall-street.html

Wall Street is bearish on Upstart stock, but it's surging this year anyway.

When the professionals on Wall Street reach a consensus about whether to buy or sell a stock, it pays to listen more often than not. But in at least one case this year, following the herd of analysts might have resulted in selling Upstart (UPST 14.93%) stock right before it made a major move higher.

Upstart has been swept up in the artificial intelligence (AI) frenzy in 2023, which appears to have caught Wall Street off guard. The majority of analysts tracked by The Wall Street Journal still recommend selling the stock, but here's why they might continue to be wrong.

Upstart is disrupting traditional lending

For the past 34 years, when a consumer applies for a loan from a bank, their creditworthiness has been measured by Fair Isaac's FICO scoring system. FICO takes into account five key factors, including a potential borrower's repayment history and how much money they still owe to other lenders.

But Upstart says FICO is outdated because its scope is too narrow, and it overlooks too many quality applicants -- particularly those in minority demographics. Upstart uses artificial intelligence (AI) to instead analyze over 1,600 data points on a potential borrower, which includes their employment history, level of education, and even where they live.

According to an internal study, loans originated by Upstart's algorithm result in 53% fewer defaults at the same approval rate as loans assessed the traditional way. Also, Upstart approves a whopping 173% more loans at the same default rate -- this implies banks are rejecting a lot of worthy borrowers.

Plus, since Upstart's technology is powered by AI, it's capable of analyzing data rapidly to make fully automated, instant approval decisions 84% of the time.

Upstart's business model is simple: It doesn't lend any money itself, but rather it originates loans for its bank, credit union, and car dealership partners, and it gets paid a fee for doing so. The upside for the lender is that Upstart's algorithm is faster and more accurate than traditional, human assessment methods, which would take weeks to analyze the same amount of data.

But Upstart is coming off a miserable 18-month period

Upstart was founded in 2012, which means it had operated exclusively in stable economic times up until the pandemic period from 2020 on. Its stock price marched higher until the second half of 2021, when it hit an all-time high of $401, but investors grew concerned when inflation began to spike, ending the period of ultra-low interest rates in the U.S.

That sent ripple effects throughout the economy, with demand for consumer credit plunging. Additionally, all of a sudden, Upstart was struggling to find buyers for the loans it was originating. Institutions adopted a "wait and see" approach when it came to the company's algorithm, because defaults began to climb, and they weren't sure if the loans would continue to perform in line with the modeled outcomes.

Upstart wound up absorbing a number of loans using its own balance sheet, which added credit risk to the company -- something investors did not sign up for -- and sent its stock to a low of $11.93.

Fortunately, as time went on, Upstart released lots of data proving its AI-powered approach is up to the task, no matter the economic environment. As of the first quarter of 2023, the company had a record-high 99 lending partners, which was almost double the number it had a year ago. That signals renewed confidence.

Plus, Upstart recently announced some of those partners pledged $2 billion in new funding to help the company weather any future speed bumps, where it might struggle to find immediate buyers for its loans.


Wall Street might be wrong to recommend selling Upstart stock

The Wall Street Journal tracks 15 analysts covering Upstart stock. Four recommend holding, three are in the underweight (bearish) camp, and the remaining eight have given it the lowest-possible sell rating. Not a single analyst recommends buying. That's little changed from three months ago.

Their average price target is $12.61. But here's the problem: Upstart stock has surged 120% in 2023 so far and currently trades at about $29! (CPPS 32.70) That means, had investors listened to Wall Street on this occasion, they would've missed a really nice gain.

Given the challenging economic climate, analysts don't expect loan demand to recover this year. They estimate Upstart's revenue could come in at $548 million for 2023, which would be a 34% drop compared to 2022, though they do expect a return to growth in 2024.

But this is a long-term story, and now that the company is on a more stable footing, this could be a great time for investors to buy in. AI is infiltrating so many industries right now, and it's almost inevitable it will make an impact on lending. For all of its early challenges, Upstart thinks it has a $4 trillion opportunity in the markets for personal loans, automotive loans, business loans, and mortgages.

Since the company is valued at just $2.4 billion today, the risk-reward proposition presented by Upstart stock sure looks attractive, irrespective of Wall Street's opinion.

[eastunder]

UPST +4.115 (14.37%) On above ave volume

Volume
The last 10-days have seen significant volume in UPST, with average daily volume above the average for the last year. Today's volume is no exception; with 11,086,493 shares having been traded already. The On Balance Volume indicator (OBV) is bullish. The slope of the indicator is positive and suggests that buyers are presently more active than sellers.
As of 2:25 PM ET Thursday, 06/08/2023

Thursday June 8, 2023
Short Percent of Float 35.97 %
Short % Increase / Decrease 10 %
Short Interest (Current Shares Short) 24,800,000
Shares Float 68,940,000
Short Interest (Prior Shares Short) 22,630,000
https://shortsqueeze.com/?symbol=upst&submit=Short+Quote%99

Short Interest Table
Percentage of Shares Outstanding 29.99%
Number of Shares Short 24.80M
Number of Shares - Previous Month 25.88M
Short Interest Ratio (Days) 2.46
Short Interest Ratio - 1 Month Ago (Days) 5.83
as of 05/15/2023

[eastunder]

UPST Cpps @ 36.97

current sets up
165.75%,33.23%,11.62%,33.39%
165.91%,56.84%,33.14%






(NTS: Have HG read for simplicity on shorts)

This Stock's 150% Short Squeeze Has More Juice Yet
By Justin Pope – Jun 10, 2023 at 8:56AM
https://www.fool.com/investing/2023/06/10/this-stocks-138-short-squeeze-has-more-juice-yet
KEY POINTS

Upstart's stock is experiencing a short squeeze.
But it's no fluke -- the fundamentals are getting better.
Upstart could continue adding to this rally.

Such significant gains in a matter of weeks aren't typical, but that's what happens when the spring is wound so tight.

Funny things can happen when the market gets too worked up about something, and the emotional pendulum swings too far in one direction. Investors saw this work against them when a euphoric market in 2021 turned into a fearful bear market in 2022: Some stocks fell as much as 95%.

Artificial intelligence lending company Upstart Holdings (UPST 9.64%) was arguably the poster child for this shift. The stock soared as high as $390 before crashing as low as $12, a remarkable swing in price and sentiment.

The stock is now up 150% since May. Why? The pendulum swung too far again, and heavy short-selling created a short squeeze. Can this continue, or is the momentum about to fizzle out?

How Upstart's short squeeze began
First, a quick overview of what causes a short squeeze. A short sale occurs when a trader borrows shares of stock to sell them. Doing that creates an obligation that must be repaid in the future. To close a short sale, which is called covering a short, the trader must buy shares on the open market to repay that obligation. The short-seller's profit is the difference between the price they shorted at and the price they bought shares to cover. For example, if you short a stock at $100 per share and cover at $90, the profit is the $10 difference for every share shorted.

As you can see, short-sellers piled on more aggressively as Upstart's share price fell. At its peak, more than 42% of Upstart's publicly available shares were sold short, which creates pent-up demand for the stock because all of these short-sellers must eventually cover their positions.

Then, the stock just needed a catalyst
Why was Upstart so heavily shorted? The company's growth and profits plummeted when it struggled to sell its loans as interest rates rapidly increased. Management began hoarding loans on its balance sheet, threatening the company's financial stability.

A squeeze happens when a bunch of short-sellers rush to cover their positions all at once, creating a tremendous demand for shares. But a rush like this often has a catalyst. For Upstart, that catalyst was the company's first-quarter earnings.

Upstart's financial performance wasn't great, but management announced that it had secured $2 billion in committed funding, and another $4 billion was announced in the following days. These funding deals give Upstart dependable buyers for its loans, helping relieve some of the funding constraints that have hurt the company over the past year. While there is work ahead, it dramatically improves Upstart's financial outlook.

Can the show go on? Yes, and here is why
It's not often that a stock is still attractive after it goes up 100% or more in weeks, but here we are. Upstart will probably remain a volatile stock, but there could still be juice to squeeze. For starters, nearly 35% of the float remains short. As the stock rises, it puts more pressure on short-sellers to cover their positions to avoid risking further losses.

Second, Upstart's fundamentals seem bound to improve at this point. With committed funding secured, which could easily continue growing with future deals, the company can begin regaining the growth it lost over the past 12 months. Upstart was previously profitable, so it's not a question of whether it can turn a profit; it's a matter of ramping the loan volume back up to what it was.

That said, investors don't need a short squeeze to justify owning the stock. Indeed, stocks that fall 95% or more rarely regain their former highs, but Upstart collapsed amid a devastating market environment, and recent financial developments potentially alter the company's trajectory.

[eastunder]

UPST CPPS @ 54.10 Earnings 8-8 A

UPST
Longterm view
$401.49 H on10/15/21
50% drop # @ $200.745
$11.93 L on 5/3/23 (-97.02% off of High)


Short term A wee bit toppy -





Plan: Cut 1/2 and repo on a 20d tag? Let 1/2 higher cost shares go long

Reasoning? Earnings should suck. Could suck. Probably will suck.
Company loses money hand over fist. Why? Because company sucks. Not changing any time soon (?)
Gap to track: 14.13 and we are heading into fall. Also Just a Really nice gain.
TGTs for rebuy on those...50 day and 200 day / wont buy the 20 day

Now: Reason to hold other half? I'm not from the future. Maybe it won't pull back right now. Short interest is obscene. My CB is low. 1st gain covers Cost basis so essentially shares remaining are free with a bit extra tossed to cash. That is a gambler move. By all rights its overextended.

Currently.. @ 54.60 stats
sell 1
On 500: CB 6.9k MV 27.3k +20.3k +287.52%
On 500 CB 6.9k/ MV 27.3k +20.3k +290.16
Locking 40.6rgs

keep the other 1
500 +94.52%/ 27.71
250 +130.12% /23.57 and 250 +95.35%/27.77
Holding 26urgs

[eastunder]

BTIG Raises Upstart Holdings' Price Target to $72 From $42, Keeps Buy Rating

09:40 AM EDT, 07/25/2023 (MT Newswires) -- Upstart Holdings (UPST) has an average rating of underperform and price targets ranging from $6 to $72, according to analysts polled by Capital IQ.

Price: 56.31, Change: +2.67, Percent Change: +4.98

[eastunder]

1 Unstoppable Stock Down 85% You'll Regret Not Buying on the Dip
By Anthony Di Pizio – Jul 25, 2023 at 6:10AM

https://finance.yahoo.com/m/705b9915-0fbd-3672-ba01-67941926c8f4/1-unstoppable-stock-down-85%25.html

KEY POINTS
Shares of Upstart have traded as high as $401 and as low as $12 over the last three years.
Investors were excited by the company's AI-driven lending models in 2021, before concern set in last year.But Upstart's models, and its business, appear to be holding up well, leading to a surge in its stock in 2023.

Shares of Upstart have surged some 350% in 2023, but there could be more upside ahead.
Shares of Upstart (UPST 16.96%) are sitting on a whopping gain of 353% in 2023, yet they are still trading 85% below their all-time high. How is that possible?

(It was making money then and now it's not? )

The stock listed publicly in 2020 at $20, surged as high as $401 in 2021, and then collapsed to a low around $12 late last year. Therefore, its 2023 return has come off an extremely low base relative to where the stock has traded previously.

You might be wondering what triggered that roller-coaster ride in the span of just three years. I'll tell you -- and explain why Upstart stock might be a buy now.

(Please do)

Upstart is disrupting the lending business

Upstart is an artificial intelligence (AI) software company focused on helping banks and financial institutions measure the creditworthiness of potential borrowers more accurately. It's no easy task; the company is up against Fair Isaac's FICO credit scoring system, which has been entrenched in the banking industry for more than three decades.

Unhooking lenders from the comfort of what they know is a real challenge, but Upstart's proposition is attractive. Its AI models can assess 1,600 different data points on a borrower so quickly that 84% of approvals are instant and fully automated, with no human intervention.

By comparison, FICO looks at just five core data points, and it can take a human assessor days or even weeks to come to an approval decision.

At the height of the poandemic during 2020 and 2021, interest rates were adjusted to record lows and the U.S. government flooded the economy with stimulus money. Consumers took full advantage and went on a borrowing binge.

Upstart processed a record number of loan originations, and its revenue more than tripled year over year in 2021. Its stock price followed along and hit an all-time high of $401.

But the tide turned in 2022 when those conditions reversed. Surging inflation forced the Federal Reserve to embark on the most aggressive campaign to hike interest rates in its history, and investors grew concerned that Upstart's AI models hadn't been battle tested in such a harsh economic environment.

All the while, consumer demand for credit plunged, which caused Upstart's revenue growth to flatten out.

It triggered a collapse in the stock price, sending shares as low as $12. But investors weren't the only ones panicking; Upstart's funding sources dried up, forcing the company to absorb some loans on its own balance sheet. That added a whole new dimension of risk to the business.

But Upstart is almost out of the woods

The company embarked on a mission to prove its AI models were holding up just fine. It has published a series of data points over the past year showing they're still significantly more accurate than traditional methods of assessment.

In summary, 53% fewer Upstart loans end in default compared to loans assessed by the big banks. That means Upstart's AI can write 173% more loans at the exact same default rate.

Those figures are likely to improve over time because the company continues to train its models on data generated from 90,000 new loan repayments each day. AI algorithms are like living neural networks: When those borrowers either make their repayments or default, Upstart's models learn and adjust accordingly as risks evolve.

That has profound social impacts, too. Upstart's algorithm approves 43% more Black borrowers and 46% more Hispanic borrowers than traditional methods of assessment. Plus, it approves them at a significantly lower interest rate. Not only is that great for those consumers, but it also creates an opportunity for Upstart's funding partners to access new markets that previously fell through the cracks.

This has culminated in a series of wins for the company in 2023. First, it had 99 total funding partners in the first quarter (ended March 31), which was almost double the number it had a year ago. Some of those partners committed more than $2 billion in funding, which will ensure Upstart won't have to put its balance sheet at risk again.

Second, in May, an investment fund called Castlelake agreed to buy $4 billion worth of Upstart consumer loans in a massive vote of confidence.

Why Upstart stock is a buy now

Buying a stock after it plunges 85% from its all-time high is never easy. But Upstart has stabilized its business and is in a great position to capitalize when consumers' demand for credit eventually reignites.

On that note, the company is eyeing a series of lucrative long-term opportunities. Right now, it operates in the personal loan and auto loan segments, which see about $946 billion in originations each year. For context, Upstart has originated only $32 billion loans in its history, so it hasn't even scratched the surface of those addressable markets.

But it gets better. Upstart has highlighted a $644 billion annual opportunity in small-business loans and a whopping $2.7 trillion annual opportunity in the mortgage market. The company hasn't entered either segment, but doing so would quadruple its current addressable opportunity.

Wall Street analysts expect Upstart to deliver $549 million in revenue in 2023, which would be a 34% drop compared to 2022. But the company's recent growth struggles might end there, because the Street predicts revenue will bounce back 41% to $773 million in 2024.

Considering Upstart's lending models have just proved their durability in one of the worst interest-rate shocks in history, the company could be poised for growth long into the future. That makes the 85% discount in its stock price an attractive risk-reward proposition.

[eastunder]

Upstart may be gearing up for a big beat, but does its stock already reflect that?
Published: July 25, 2023 at 2:11 p.m. ET

https://www.marketwatch.com/story/upstart-may-be-gearing-up-for-a-big-beat-but-does-its-stock-already-reflect-that-b06b73a2
By Emily BaryFollow

An analyst sees encouraging third-party data points ahead of Upstart’s next report, but he also notes a strong recent stock surge

Upstart could beat second-quarter revenue expectations by $10 million, says BTIG. Upstart Holdings Inc.’s shares were surging in Tuesday trading after an analyst said he thought the company was getting ready to report a “strong top-line beat” for its most recent quarter.

BTIG’s Lance Jessurun looked at web-traffic data, which he saw as suggestive of likely Upstart UPST, 20.25% upside in the second quarter. He expects that the company’s revenue will come in about $10 million above management’s forecast and the consensus view, both of which are for $135 million.

Upstart’s stock was up 18% in Tuesday’s midday action.

Do investors already expect an upbeat report when Upstart posts results Aug. 8? Perhaps, according to Jessurun, who notes that shares had gained 73% from June 13 to the publication of his Tuesday report, a large run that potentially indicated short sellers were covering their positive ahead of earnings in light of encouraging third-party data points.

Jessurun said that investors “seem to be changing opinions” on Upstart’s stock lately. The stock had a huge comedown in 2022, shedding some 90% of its value, but even back in mid-June when Jessurun initiated coverage of the name, he sensed “mixed” sentiment from the investment community.

He’s sticking with his buy rating even after the recent rally, lifting his price target to $72 from $42 Tuesday.

“While we acknowledge that there are valid, lingering questions investors will continue to have on deal economics and terminal value, it is tough to see a downside catalyst that will bring the name back to the ~$10-20 range, especially into what looks like a strong quarter,” he wrote. Shares were changing hands just south of $64 Tuesday.

(NTS open gap at 14.13 5/9/23)

In a separate, broader preview of upcoming fintech earnings, Jessurun said that Wall Street will be intently focused on macroeconomic commentary when industry players report, including related to areas like “credit quality, payment trends, discretionary spend, deposit trends, and student-loan forbearance impacts.”

[eastunder]

UPST now +20% and up +11.23

Note: Fed meeting on interest rates tomorrow.

[eastunder]

UPST @ 63.44

Sets @ +356%, +355%, +169%, +128.835% & +128.64%
+86K urgs on 2000 shares with CB of $40.6 k & 126K MV

Tapping out w/ limit target. Mucho Gracias UPST

[eastunder]

UPST 33.24
9-5-23

[eastunder]

UPST

10-3-23

26.11

Upstart Holdings (Nasd: UPST)

SEC, nasdaq, ShortSqueeze

Finviz, StockTA, Stoxline,