37 Comments

This was a loooong read :)

But this was really excellent, the best review of Upstart's business I've read so far.

Thanks Brad for all the work you put into it.

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Feb 4, 2022Liked by Brad Freeman

Outstanding write-up Brad! Took me awhile to get through it all :-) Thanks!

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Feb 1, 2022Liked by Brad Freeman

Loved the comprehensive overview and analysis of the name. Keep up the great work.

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Feb 1, 2022Liked by Brad Freeman

Excellent deep dive. Thank you

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Feb 1, 2022Liked by Brad Freeman

Great analysis! This is the most in-depth research on UPST I’ve come across. I noticed several of your tables have footnote notation. Did you mean to share footnotes? I’d certainly like to read them. I was especially blown away by the table on payment impairments by credit score vs. UPST risk tiers. Is this from a recent 10-Q or other filing? I’d certainly like to track it.

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Jan 31, 2022Liked by Brad Freeman

What price target do you see $UPST in a year? 5 years?

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Robust and rigorous analysis. Simply excellent!

I also agree that a 1-2% increase by the FED over 2ish years could be inconsequential to UPST.

Keep it up Brad!

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Jan 30, 2022Liked by Brad Freeman

Great deep dive and loved the breakdown on loans either being retained by banks or sold through capital markets and why this matters.

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Jan 30, 2022Liked by Brad Freeman

Thank you for the deep dive Brad! Was wondering if you have any thoughts on this piece showing the potential softer spots with UPST?

https://seekingalpha.com/article/4480948-upstart-upst-5-factors-driving-stock-down-long-term-growth

https://twitter.com/InvestiAnalyst/status/1487520055780913153

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Jan 30, 2022Liked by Brad Freeman

Another question. Sorry I keep them going. “ Standard & Poor’s expects this market to double from 2021 to 2024 representing an accelerated 26% CAGR over that period.”

If I read this correctly UPST could benefit from 25% organic growth just from market not accounting from their own performance ?

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Jan 30, 2022Liked by Brad Freeman

Another question of mine, maybe more qualitative this time.

The potential around the car market is very unknown, despite maybe the larger TAM. Management refers to it to a meaningful contribution of their topline next year.

When I see growth projection for next year, this is all for core business right (personal loan)? No way this is somewhat already included

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Hi Brad

You mentioned that you welcome feedback. Here are my 2 cents.

$UPST doesn't have skin in the game. No customer-facing brand value. At best it can hope to be a new FICO-like standard. Eventually, it will sell its AI-based reports for $25 a pop.

Also, don't underestimate silicon valley and eventual competition from new wanna-be startups.

In my opinion, you cannot remain profitable unless you create a customer-recognized brand.

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Hi Brad,

very nice to meet you, I want to give a very high compliment for yr outstanding and in depth report.

Excellent. I have to read it a few times to consume it and memorize it.

I have always had a soft spot for Upstart, and have been a long holder for a while now and I still buy every month. Their actual real TAM is absolutely astounding.

And re AI, if we could find better and faster tech ways of getting AI to explain to us how and why they are making decisions it would be a big leap. It will keep improving, I am just impatient I suppose.

Mckinseys Jan 2018 report, estimated that the most advanced deep learning techniques deploying artificial neural networks could account for as much as $3.5 trillion to $5.8 trillion in annual value, or 40 percent of the value created by "all" analytics techniques.

I havent seen the lastest numbers yet, but I can imagine the growth being high and large.

all the best for new yr Brad.

cheers kev

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You do a great job Brad. Thanks for all the information!

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Very detailed and thorough write up. Excellent work! One question I have is does UPST retain any of the risk from the securitizations? Specifically who ends owning the bottom piece?

Thanks

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Great analysis. I usually stay away from companies I don't understand but Upstarts valuation is to attractive so I'm trying to understand the risks of the business. I understand the macroeconomic risks like rising interest rates but I don't understand capital markets.

As someone who clearly knows more about this than me, is Upstart's reliance on capital markets potentially bad, is there anyway this system could result and lead to Upstart not being able to fund the majority of their loans. Are Capital markets a secure and safe way of accommodating loans essentially. Sorry for the long question

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