Another reason to buy the dip on $UPST is the "auto lending" story
Recently, $UPST was named the fastest growing digital retail software for auto dealerships. This is good news as it shows that its expansion into the auto lending industry is going well.

With supply chain issues easing and more automakers finding that the slower demand in chips is helping them alleviate their chip shortage issues, we can see more auto sales in the coming months. Despite WTI Crude plunging from its highs, it's still well above its historic average. Consumers are still demanding electric vehicles and currently, many are still struggling to get their hands on one.

As companies like $RIVN and $PSNY reaffirm to investors that they can meet their high production targets, we will see more consumers taking out auto loans (despite the higher interest rates) to buy electric vehicles. If startups are seeing their chip issues resolving, I bet the larger automakers are experiencing something similar as well.

Assuming that many will be taking out loans at dealerships to buy electric vehicles from $GM and $F, Upstart's auto lending business can provide more growth for the overall business. Policymakers are going to capitalize on the improving conditions of the automotive supply chain to promote more buying of electric vehicles.

Upstart is a pick and shovel way of this unprecedented event in the auto industry as many will be switching from gas to electric and policymakers are doing their best to have more people buy electric vehicles ASAP. And since nearly all consumers can't pay for cars with cash, they're going to take out loans to finance these purchases, creating unprecedented demand for auto loans.

Hopefully, $UPST can offload more of its existing loans from its books so that it can have more cash to originate more loans. And hopefully, credit conditions improve so that debt buyers are willing to buy more loans from Upstart.

Gaurav Kotak @ Fincredible's avatar
i thought $F and GM had their own credit divisions. Are they using UPST either for tech or outsourcing the lending?
Ben's avatar
@gkotak my understanding it’s tech at the dealership level to replace or at least add to traditional credit risk assessment (FICO). UPST doesn’t want to be a lender. The loans on its balance sheet currently are for research purposes (refining the algorithm for new credit products) or one time event during the credit crunch earlier this year (which they say they won’t do again)
Gaurav Kotak @ Fincredible's avatar
@rpinvestments they don't want to be a lender but turning out to be a pretty big one for 'research' purposes. If their tech is so good, couldn't they do joint research via one of their customers?
Dissecting the Markets's avatar
@gkotak their dealers are
Gaurav Kotak @ Fincredible's avatar
@dissectmarkets but still on their balance sheet
Gaurav Kotak @ Fincredible's avatar
The issue I've always had with $UPST I just don't believe their AI-tech is better. Same issue I have with Lemonade and Clover, once darlings now down 70-80%. Yes that are 'more' tech savvy, but not enough to move the needle in any meaningful way. Do you believe otherwise and why?
Ben's avatar
@gkotak image
If this is accurate, then this is why UPST product is superior

Gaurav Kotak @ Fincredible's avatar
@rpinvestments is it accurate? I'd bloody well make sure it is before I invest
Ben's avatar
@gkotak it’s a company reported metric. They don’t share, nor would I even know how to parse, the actual raw data. As will all investing, you have to trust
@rpinvestments to some extent, but you can’t take the word of the company on such a thing most of the time, right?
Dissecting the Markets's avatar
@madbadetc usually, otherwise they'd receive scrutiny from the SEC
Dissecting the Markets's avatar
@gkotak unlike $LMND, $UPST has an easier time achieving positive cash flow because of the business model.
Dissecting the Markets's avatar
@gkotak do you see Chelsea Clinton pushing $CLOV higher?
Gaurav Kotak @ Fincredible's avatar
@dissectmarkets I don't really care about what Chelsea Clinton is going or what anyone is doing to 'push' any stock higher. I only care about the fundementals.
Gaurav Kotak @ Fincredible's avatar
@madbadetc The CEO was on a podcast (I can't remember which one) where he professed there 'models' need to be retuned for the current macro environment. Kinda defeats the purpose of the model. I would not buy it one bit
Gaurav Kotak @ Fincredible's avatar
@dissectmarkets Is UPSTART profitable / cash flow position?
Gaurav Kotak @ Fincredible's avatar
@gkotak looks like they are proftiable and good gross margins. I'm going to listen to their next/last earnings call given this :)
Conor Mac's avatar
Very interesting sir

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