Thread by @RamBhupatiraju

$UPST These are definitely weird times. You never expect a position (bought for long-term) to return more than 100% in 7-8 business days.

Although I usually wait few Qtrs after any IPO to understand the how the Business & Management perform in Public Mkts, in this case as I was still researching/liking the Company, Mr. Market offered a 50% discount on March 5th/8th and I couldn't resist.

https://twitter.com/RamBhupatiraju/status/1371104243055214593

✅What I liked in my (not so deep) analysis ⬇️

✔️Attractiveness of it's current products (making credit available for more eligible people, using better/comprehensive metrics compared to legacy ones).

✔️Achieving much better approval rates (at the same loss rate as traditional lending), and much less defaults (at the same approval rates as traditional lending).

✔️ Smaller/Community banks do not all have the capabilities to develop ...

.. a highly technical Lending model (AI/ML based, getting better with more data...)

✔️Expanding into Auto, and possibilities to enter Credit card, Student loans and Mortgage categories.

✔️$2B Market Cap company with a modest P/S ~10 (on March 5th/8th), ~ 40% Revenue growth, >80% gross marings, already showing (small) profitability.

✔️Experienced Management in Technology & Finance.

❌What I didn't like ⬇️

✔️Concentration on referral side (Credit Karma) and Lender side (Cross River Bank).

✔️Revenue sensitivity during severe downturns (as Loan application volume dries up), but since they don't have a cost structure like a regular Bank, might fare OK in case of a shorter downturn.

Since this is a new IPO, there wasn't much information online other than the website description and S1 from Dec

ir.upstart.com/static-files/1…

upstart.com/about#

Two excellent writeups that put this Co up on radar (on Twitter).

1⃣ @JonahLupton 👏

jonahlupton.substack.com/p/upst-upstart

2⃣ @GetBenchmarkCo 👏

getbenchmark.substack.com/p/upstart-ai-d…

Latest Qtrly results, released yesterday.

ir.upstart.com/news-releases/…

Announcement about acquiring Prodigy Software (Automotive Retail Software) to accelerate their efforts to offer AI-enabled auto loans through the tens of thousands of auto dealers nationwide.

ir.upstart.com/news-releases/…

If there wasn't much news and the stock rises 100% very quickly, one might be tempted to take profits, but if the Company recovered from a big drop, then releases good results, provides good guidance, along with a nice acquisition, things get interesting.

Time to learn more. 🔎