TheGribbler

Original Gribbler. Personal investor. Not investment advice. All posts are opinion only.

[TheGribbler @TheGribblerOG]

$UPST CFO spilled the beans about lack of Auto Retail rooftop growth at the Goldman fireside on 9/7, noting that total Prodigy rooftops are still only at ~800

(timestamp: 31:30 at GS webcast)

Upstart removed the auto slide from their IR Deck after Q4 and now we know why.

1/5

[TheGribbler @TheGribblerOG]

@WDO8b28BaNfr7TP @HenryInvests @app_hyd @spacanpanman Agree you can’t read into quarterly CAC trends much. Really looking at a multi-year horizon. Ultimately they only have whatever timeframe investors choose to give them to prove out sustainable unit economics and profits, and that’s anyone’s guess.

[TheGribbler @TheGribblerOG]

@WDO8b28BaNfr7TP @HenryInvests @app_hyd @spacanpanman $UPST has done a great job optimizing and automating their business and getting loans to underbanked people who need them, but long-term if all the profits go out the door in stock comp it’s a charity run for employees and underbanked borrowers not a viable business

[TheGribbler @TheGribblerOG]

@WDO8b28BaNfr7TP @HenryInvests @app_hyd @spacanpanman I said $PGY partner fees are basically CAC but that’s it a loose comparison. Ultimately, $PGY has a real biz model (profitable in a normal rate environment) despite some balance sheet / funding issues they’ve dealt with. $UPST is still a ??? filled with hope and broken promises.

[TheGribbler @TheGribblerOG]

@WDO8b28BaNfr7TP @HenryInvests @app_hyd @spacanpanman I think if you look at the low-credit borrower cohort for $UPST very few of them are homeowners. And the ones who are (or will be), very few have enough equity to pull a no-appraisal HELOC or home loan out. Little synergy there. Amex and others own the prime/super-prime channel

[TheGribbler @TheGribblerOG]

@WDO8b28BaNfr7TP @HenryInvests @app_hyd @spacanpanman One of my contentions all along is that it you look at the dominant personal lenders, they have strong cross-sell into loans from credit cards (Amex), banking (mega banks) or other FinServ (SOFI). Those are viable biz models for lending. I’ve struggled to see the $UPST vision

[TheGribbler @TheGribblerOG]

@HenryInvests @WDO8b28BaNfr7TP @app_hyd @spacanpanman PS - $UPST CAC is trending up as a % of loans and up massively on a $ figure. YOY Q1 $24.8m to $48.6m.

I see several years as the #1 upstart bull and you’re still struggling to decipher basic disclosures. I remember years ago having to explain to you how diluted shares worked

[TheGribbler @TheGribblerOG]

@HenryInvests @WDO8b28BaNfr7TP @app_hyd @spacanpanman Henry your arrogance as a $UPST attack dog is not a good look. Don’t let stock price cloud your view of fundamentals. Bulls have been claiming imminent GAAP profits right around the corner for the past 3 years. Why is now different?

[TheGribbler @TheGribblerOG]

@WDO8b28BaNfr7TP @app_hyd @HenryInvests @spacanpanman It’s loosely comparable because $PGY production costs (fee split to partners) are like Customer Acquisition Costs. $PGY has no direct CAC. $UPST has sizable CAC.

The valuation gap is obvious. And years later $UPST still struggles to prove out a viable marketplace biz model.

[TheGribbler @TheGribblerOG]

@Stonefoxcapital $COST 16 weeks (2024) vs 17 weeks (2023) so effectively 7.3% growth🤦‍♂️

[TheGribbler @TheGribblerOG]

@HenryInvests @boilerjoe99 You realize that loan consolidation (probably 70% of personal loan volume) relies on $UPST undercutting cc rates. If cc’s are forced to set rates at similar rates that UPST underwrites to, there is no economical way that UPST can undercut them and no borrower incentive to refi.

[TheGribbler @TheGribblerOG]

This would put $UPST out of business overnight if it happens. @HenryInvests

[George @BehizyTweets]

BREAKING: Trump announces that as president, he will immediately implement a temporary 10% cap on credit card interest rates

"We can't let them make it 25% and 30%."

Credit card interest rates are at a historic high under the Kamala-Biden regime. His simple plan will alleviate a lot of pressure from hundreds of millions of Americans.

I'm running out of words to describe how good his policy proposals will be.

[TheGribbler @TheGribblerOG]

@HenryInvests @boilerjoe99 Why does there need to only be one potential negative catalysts? To be clear I haven’t abandoned my core viewpoints that $UPST will be unsuccessful in taking material market share in Auto/Heloc, and that they lack a viable biz model in personal loans to make sustainable profits.

[TheGribbler @TheGribblerOG]

@HenryInvests @boilerjoe99 The lending industry has a long history of continuing to lower the ceiling on usury rates to protect consumers. It’s naive to think the trend won’t continue. $UPST

[TheGribbler @TheGribblerOG]

@HenryInvests @boilerjoe99 I wouldn’t look at this Trump situation as binary outcomes. I doubt this policy happens with a 10% ceiling. More plausible concern is a watered down version (18%-20%) that the banks accept which could still materially impair the loan consolidation flow to $UPST

[TheGribbler @TheGribblerOG]

@HenryInvests @Upstart You could argue $UPST are being conservative in the event of a recession tanking the stock but regardless they pumped the guidance, looked at a $38 stock price and said “this is a great time to dump equity on the market”. This is not bullish on the guidance being hit/exceeded.

[TheGribbler @TheGribblerOG]

@HenryInvests @Upstart What’s important is the signaling that $UPST mgmt doesn’t see high probability of a higher stock price in the next 2 years or they would have waited to pull the trigger.

Also, your share counts are not right. Negative EPS ignores dilutive shares , but that’s besides the point.

[TheGribbler @TheGribblerOG]

@HenryInvests @Upstart The old $UPST notes are out of the money, a monetary obligation at this point. Use of proceeds here is irrelevant. You’re missing the obvious point that the main cost of a convert issuance is a function of the conversion price and stock price. Simple corporate finance 101 Henry