Why I've been bullish on this leader in AI disrupting the Trillion-dollar Consumer Lending Market!
✅What is so special?
✅What are the Competitive advantages?
✅ $LMND of Lending?
Let's explore in this deep thread👇👇
1/ Thread Overview:
2- Company Overview
4-Competitive advantages & Emerging Moats
5 -Financials & Customer Growth
7 - Market Opportunity
8 - Management Team 9- The bear thesis & Risks
2/ $UPST Overview:
A lending platform that applies AI & machine learning to improve the consumer lending and underwriting process for making effective credit assessments.
They help their bank partners by referring loans, creating a seamless and simple consumer facing app.
3/ $UPST Cont'd
🛑OLD: Most F.I use FICO scores, around 30 indicators to determine credit.
✅FUTURE: Holistic method now, $UPST applies AI to get 1600+ indicators based over 10.5milion trained variables (Ye!) about a persons background to determine data-driven credit decisions.
4/$UPST Competitive Advantages [Emerging Moat]
Build vs Lease: To rebuild a modelling system to recreate credit decisions is expensive but its easier to partner with $UPST, creating a win-win for banks as they save massive costs as well as an easy process for consumers.
Cont'd
4i/ $UPST Advanced AI Effectiveness:
Their system is more advanced, more efficient and superior
a) 75% reduction in loss rates
b) Over 70% of loans are performed without documents
c) Higher approvals for banks
d) Higher automaton, reducing human error & cost
As seen below
4ii/ $UPST Compelling value prop..
The value to banks is $UPST's advanced machine learning increases more effective loans --> lower loss rates --> More loans approved -> more money for the financial institutions --> more money for UPST.
Leads to high switching costs for banks.
4iii/ $UPST Comps.. Flexible
The Ease of Customizability & Integration capabilities for bank partners such that banks can integrate their existing system allowing the bank to input their variables and to define their own credit policies.
Con'td
4iv/ $UPST Comps... The model
A Two-sided business model and network effects as $UPST acts as the middle man between aggregating consumer demand --> which helps the Revenue growth of bank partners as well as helps upstart too
Multi-channel revenue model from the Ecosystem below
5/ $UPST 2017 - 2021 Financial Growth:💰
Beautiful Revenue growth has consistently accelerated
Bump in growth for 2021 due to:
i) high ROI on their models,
ii) the reopening
iii) Liquidity (excluding acquisitions)
*Remarkable despite the negative effects of the pandemic
5ii/ $UPST Financials (2) - FY 2020: 💰
They have become incredibly efficient while growing top-line! (Beauty :) )
- Contribution Profit ($105M), Up 115% YoY.
- Income from Ops ($11.8M), Up 357% YoY
- Adj. EBITDA: $32M, Up 463% YoY
6/ $UPST Customers & Total Transaction Volume Growth: 💵
They now have over 13-15 Bank Partners.
Observe the acceleration in loans transacted on their platform
- Over 750,000K Transactions since they were founded.
This translates to more data for their AI models :)
7/ $UPST Market Opportunity & Prize: 🌎
• The consumer lending market: $4.2 Trillion, $UPST 5% market share
• The BIGGEST markets are Auto Loans, Mortgages, student loans, business loans and credit cards. (Worth Trillions)
• There are over 3500-5000 FI's that could use $UPST
7i/ $UPST TAM Expansion: 🌐
They just expanded their TAM into Auto's with this acquisition -- This is why the stock is UP BIG because this is massive!
Auto is among the Top-3 largest lending market beyond mortgages in the US.
8/ $UPST Mgmt Teams (My favourite!)
One of the most competent teams I know!!
Founded in 2012 by 3-Co-founders! (30% ownership stake]
David Girouard CEO (formerly w. Google and Apple) – called father" of Google Enterprise building it from scratch.
✅ Top Glassdoor ratings!
8i/ Mgmt Cont'd:
- 2nd Founder: Anna Couselman (Fmr. Google and ran Gmail)
- Paul Gu (29yrs) but incredibly smart. He was recognized as one of Peter Thiel's 20 under 20 Fellows <Top 1% of society's gifted> Also Forbes 30 under 30
- Company has awarded for a great culture
9/ $UPST Risks:
• The story is early
• Customer Concentration and Crossriver bank risks
• Issue with Credit Karma & need for referrals
• Longer sales cycles
• The big banks may to build their models from scratch
• Competitors like $NCNO $LC? [No credible ones so far]
10/ $UPST - Other Notable Achievements:
• Upstart is #12 on the Forbes top 50 most promising artificial intelligence companies of 2019.
• Inc Magazine's Best Workplace for 2020
• Higher NPS and superior product reviews and customers love the product.
Personally, I'll write about the conference call, takeaways, 2020 highlights and What Investors can expect in '2021: investianalystnewsletter.substack.com
10/ $UPST Summary:
✅Financials: Profitable & rapidly growing
✅3-Superior Founder Led Team & Culture
✅Great product with superior reviews & NPS
✅Leading advanced technology product
✅Compelling Value proposition and competitive advantages
✅ Trillion-dollar industry TAM.
11/11- $UPST Final words:
Personally, I've worked within AI on a complex project for determining credit decisions for my FI.
Hence, I wanted to share with my followers why I've been bullish.
Thanks for reading and If you enjoyed, kindly share.
What are your thoughts? :)
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• What are the differences vs similarities btw both companies?
• 🚨Revenue Growth rates over 281% & 152% respectively
• What are the risks of Investing? Can we trust both?
• $FUTU Earnings Recap
• Are they worth it?
Biz Thread below👇
0/ Thread Overview [Skim to your sections]
1: Financials Overview
2-3: $FUTU vs $TIGR Competitive advantages
4-5: Financial Analysis Summary
5-6: Management Teams
8: The Risks to Weigh
10: Industry and market Opportunity
1/ Company Overview: Super easy, nothing much.
$FUTU & $TIGR - Platforms that enables buying & selling of equities.
Key Highlights:
✔️Q4-2020 Revenue: Actual $139M vs. Est. $130M (53% YoY Growth) (7% Surprise)
✔️EPS: Act. $0.10 vs Est. $0.12
✔️Q4- GAAP Ops. Income Margin of 21% and Adjusted Margin of 45%
✔️FY 2020: 63% YoY Growth
This is a Top-class company-✅🔥
Part 2 - $ZI
- Cash flow from operations of $169.6 million, and Unlevered Free Cash Flow of $243.7 million.
- $ZI closed the year w. >20,000 customers, including more than 850 customers with $100,000 in annual contract value
- FY 2021 Guidance below
Part -3: - $ZI
* I may start another position again as I sold my position a few weeks ago.
- Top-line Revs growing >50% consistent
- High gross and ops margin
- Founder-Led with three awards for 2020 culture & placed No. 15 on for Best Company Culture
- Moat within sales teams
Weekly Fundamentals✅: $VUZI Corp was 🆙 over 30% today.
I've been talking about $VUZI since it was $9 b'cos of the capability to solve key problems across multiple verticals.
So here below was my thesis (maybe its why $ARK Invest bought? or $AAPL is investing here)
Thread👇:
This $VUZI thread contains of the following
1-5: Overview & industry use-cases
7 - Financials
8 - Industry
10 - Competitive advantages I believe makes $VUZI maintain a good position in the AR Market
*There are risks, but you'll need to be open-minded & be big picture minded*
1/ $VUZI
They design, manufacture, market and sell Augmented Reality (AR) Smart-Glasses display, wearable computing, AR optics technologies, display engines and products for the consumer and enterprise markets.
*No, this is a real product being used today, not a story stock*
$PLTR Investors should focus more on Foundry, the commercial business and leave behind the past $PLTR of US Gov’t
In this analysis, I utilize my experience as a Product Lead for AI projects to highlight factors I believe differentiates Palantir.
Below is a thread of the report-
1/ The best way to understand $PLTR software philosophy. Think of it as a funnel.
i) Data Integration to absorb data
ii) Knowledge & Data Management
iii) Advanced search and discovery
iv) Intuitive app to drive collaboration
It goes back to the early days with Peter Thiel.
2/ The Four Tenets that guide Foundry:
i) Ontology of data and wide-ranging use case templates
ii) Advanced AI Capabilities and simulation modelling from the ontology
iii) Modularization with a variety of software apps
iv) Interoperability with any data platform such as IBM’s